It’s the most wonderful time of the year: tax season! All jokes aside, a recent study found that the majority of taxpayers dread doing their taxes. Taxes take time, can cost money, and many people find them confusing. They’re basically like homework for adults.
But taxes don’t need to be so terrible. Through years of experience and repetition, I have gained efficiencies to speed up the process. While you may not be at that level, here are seven ways to be more organized for tax season – so you can stop dreading the paperwork and get back to your life.
1. Gather as you go
Collect all tax-related information in one place as it arrives. When you receive an envelope in the mail with a tax document enclosed, add it to that spot immediately. You’ll be able to easily find it later on, which will help make your tax filing a smoother process.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
2. Designate a place
Keep previous years’ tax information in a central location. In most circumstances, your tax filing this year will be largely similar to the previous year. For this reason, you may want to reference previous tax documents to confirm specific numbers or even to see which documents were relevant. You can store your tax information in a folder on a bookshelf, a file in your safe, or even a “Box of Knowledge” in the closet. Pick one and stick with it.
3. Go paperless
If you are technically inclined, get your tax statements electronically. It’ll be faster, better for document retention, and help you streamline your taxes in future years.
4. Know what you need
Think about where your money is stored and any companies that may have a long-term relationship with your money. Check each of these places for tax-related information. For reference, if you have any of the following, you may need a related tax statement for each:
- A job: You should get a W-2 form, and if you received unemployment, you should get a Form 1099-G.
- Debt: A mortgage for a home (Form 1098), student loans (Form 1098-E), a personal loan that’s forgiven (Form 1099-C), other loans.
- Daycare: All the receipts you’ve saved from day care or after-school programs showing your expenses.
- Bank accounts: Savings accounts and interest-earning checking accounts (1099-INT form for interest you’ve received).
- Investment accounts: Depending on what types of accounts you hold, there can be several forms to watch for (1099-B for capital gains, 1099-DIV for dividend income, 1099-R for retirement distributions, etc.).
- Donations: Charity contribution receipts and end-of-the-year receipts from any monthly or recurring payments.
5. File early
The sooner your taxes are filed, the surer you can be that they were submitted properly ahead of the deadline and that you won’t get any surprises from the IRS later on. Filing earlier may also lead to a quicker turn-around time on your refund.
6. Know where you stand with the IRS
If you’re dying to know the status of your refund, the IRS has an online tool for that: the “Where’s My Refund” portal. Otherwise, if you have a tax question, it can be difficult to get a hold of the IRS. They are understaffed, catching up with many rule changes, and processing a lot of tax documents. For this reason, you may receive a letter from the IRS that doesn’t make sense. Don’t panic. There’s probably a good explanation for it.
If you need to call them with a question, be patient and expect a long wait time. You can also check the IRS website to access tax records, see whether you owe the IRS any payments and whether they have processed your payments or tax returns.
7. Know when to get help
The IRS doesn’t want to see mistakes on tax forms. If they catch a mistake on your form, it could cost you time, money and stress to get it resolved. Many tax-filing software programs are good for straightforward circumstances, but you may not receive the full refund you deserve. Being a business owner, having a higher income, and investing are among the factors that could complicate your tax-filing status.
The more complicated your taxes are, the more it makes sense to find a tax preparer (the IRS also has a preparer directory). A tax preparer or tax adviser can ensure your taxes are filed properly, that you take advantage of tax breaks when available, and can also correct mistakes with the IRS on your behalf. It’s a win-win!
Taxes don’t have to be scary … they only come once a year. They are not meant for you to panic or have anxiety. Being organized and a little professional help can take that stress away. Find a strategy that works for you.
-
Are You a High Earner But Still Broke? Five Fixes for ThatIf you're a HENRY (a higher earner, not rich yet) but feel like you still live paycheck to paycheck, there are steps you can take to get control of your financial future.
-
Tax Diversification: Smart Ways to Preserve Your Nest EggA long and active retirement may be costly — and may even bump you into a higher tax bracket. Paying some taxes on your savings now could be the answer.
-
Are You a High Earner But Still Broke? Five Fixes for ThatIf you're a HENRY (a higher earner, not rich yet) but feel like you still live paycheck to paycheck, there are steps you can take to get control of your financial future.
-
Tax Diversification: Smart Ways to Preserve Your Nest EggA long and active retirement may be costly — and may even bump you into a higher tax bracket. Paying some taxes on your savings now could be the answer.
-
How to Thrive in Retirement: Balancing the TradeoffsTo cultivate a happy retirement, you need to tend to it as carefully as you would a flourishing garden, and that means making the right choices for you.
-
Kick the IRS to the Curb in RetirementThat 401(k) or traditional IRA you've filled with your hard-earned money could turn into a tax bomb. Before it blows, see if a Roth could help rescue you.
-
How to Stop Scammers Targeting Your Retirement SavingsAnyone can fall victim to a financial scam, but retirees can be more vulnerable than most, so stay alert to these common tricks that could catch you off guard.
-
Choosing a Trustee? These Six Tips Can Help You Pick WiselyHow can you be sure a trust will be managed properly, without causing a headache for the beneficiaries? The key is choosing the right trustee (and a backup).
-
Five Things That Are Spiking Your Insurance PremiumIt's a drag, but just as your expenses keep rising, so does the cost of doing business as an insurance company. That means higher premiums.
-
Is Your Cryptocurrency Safe? How to Shield Digital AssetsCreditors, hackers and frivolous lawsuit filers could be coming for your cryptocurrencies. These estate planning and asset protection strategies could help.
