Stay Organized All Year with These 4 Tips

When it comes to tax time, there can be quite a bit of stress gathering the necessary paperwork for your tax return to be prepared. To reduce that stress, consider working at increasing your organization for tax time throughout the year. When you make your appointment with your tax professional or accountant, such as JOE GORMLEY CPA in PRINCETON, NJ, being organized can make it easier for your tax professional and may make it cheaper too. However, a lack of organization can often mean that deductions and credits we qualify for are left on the table, because we do not have the backup. Below are four tips to assist getting organized for the upcoming year!

Start With A Strategy

Since it is tax time now, take advantage of this year’s appointment to strategize for the next one. Speak with your accountant or tax professional about what deductions that you might need to be aware of for the upcoming year. Ask them what you need to be tracking or collecting through the upcoming months. Create a plan that you will work off of throughout the year.

With this plan, you will know what items you should be keeping in your tax folders or files. Your tax professional can also let you know what is worth collecting or tracking that might be outside of your normal deductions. For instance, it might be worth tracking your mileage and automobile expenses if you use your vehicle regularly for volunteering errands. However, if you only use your vehicle occasionally for volunteering purposes, then it might not be worth taking the time to keep a mileage diary for tax purposes.

As you can see, having a plan will assist you in putting the effort into the right areas, versus wasting time collecting something that won’t assist you at tax time.

Label Your Storage

Many accountants can provide a tax organizer worksheet that can assist you in getting prepared for your appointment. This will cover a variety of areas where you might see changes, including purchasing a new home or the birth of a new baby. Below are a few items to be sure and include in your tax preparations.

• Closing letter for a home refinance or purchase
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• Real estate tax receipts if they are not paid through an escrow with your mortgage company
• New baby’s social security number to claim the child as a dependent
• Any tax payer ID numbers, addresses, and phone numbers for child care providers
• Business mileage for any unreimbursed business expenses

Using this list and your plan, create folders for each item you will be tracking. Make sure that you have an envelope attached for any receipts or other notes. If you are tracking mileage, then you need to keep a journal and receipt envelope in your car, making it easy to keep up with those records throughout the year.

Gathering the Backup

In order for your tax preparer to determine which deductions apply to your circumstances, or to determine your eligibility for various tax credits, you will need to provide documentation for all major changes that have occurred throughout the year. Therefore, it is important to make sure that you keep files with receipts for your business, medical expenses and charitable donations.

If your tax professional or accountant have discussed potential deductions, be sure that you have documented them. Investments also mean that you will receive 1099s for your interest income and any summaries of your investment portfolio that are provided.

Bring to your appointment a list of all your deductible costs organized by category. The accountant might not need the actual receipts for most expenses, although you should keep them filed away for at least seven years, per the IRS. If you have more complex transactions, or those that are out of the normal sphere, bring the receipts and documentation in for those particular transactions or events.

Check and then Double  Check

If you did proper tax planning for the year, then you should already know what to look for throughout your financial year and what to document. But it is still worth another look to be sure you didn’t miss anything prior to sitting down with your accountant. There could be that expense for a job-related subscription or a business oriented repair, both of which could be deductible.

Finally, it is important to remember that being organized and prepared will save your accountant time and allow them to truly assist you with your filing.

Click on the link with one of the tax professionals or accountants at JOE GORMLEY CPA in PRINCETON, NJ, to get started on organizing for next year!