Haven’t We Already Said This?
Ernie Neve, CPA
March 26, 2020
Every year I mention this and every year, it’s worth sharing again.
Taxes don’t have to be painful, but the longer you wait or the less organized you are, the less enjoyable (and more expensive) they can be.
Many times, over the years, we’ve joked about the “shoebox filled with receipts” and, as hard as it is to believe, we still see some variation on this theme. With that in mind, I want to share some easy ways to organize your tax information – even though it’s really too late for 2019 – 2020 is here and, if you start right now, you’ll spend far less time scrambling this time next year.
First of all, pick a few categories to organize in.
While it might make the most sense to do it by the month, other ways of keeping your information straight could be to organize by the subject.
Mortgage payments. Social Security monies received. Car maintenance expenses. Mileage.
You name it – as long as you can figure it out and keep track of it, it’s a system, and systems are far better than simply piles, right?
Now, we are well into the digital age, so if you want to be super organized, you could create a digital spreadsheet with everything on it, then simply scan and link an image of the document, too.
Yes, that’s “cool” but what about this: Take the major categories of your return – income, for example, and the taxes you are actually paying.
That’s covered in your W2 your employer sends out in January.
No real need to document that anywhere else.
Which leaves us with expenses, contributions, and deductions. Again, a LOT of these are documented in 1099s and 1095s, as well as your monthly account statements.
To tell the truth, simply reviewing these each month and then placing them (in order) in a binder for each month is going to be far more effective than many of the “gadgets” out there on the market today – especially if you actually take the time to place them in it each month when you receive them.
Believe me – simple is usually better, especially if it’s easy enough to get it done.
As we get closer and closer to Tax Day, I really want to encourage you to make this the year you really “get organized.” It really doesn’t have to be hard and in the long run, it can save you loads of time next year!
P.S. If you are really struggling to figure out the best way to get sorted, then let us know. We see a lot of ways that people do it every year and we’re happy to try to share it with others – it literally is part of our job!