With tax season just around the corner it is always important to try to get organized to avoid having serious issues arise with the IRS. However, no one enjoys the stress of scrambling at the last minute to get things organized and trying to beat deadlines.
Instead, it is much better to utilize organizational strategies for your taxes year-round.
There is a wide variety of steps you can take to ensure you will already be prepared every year when tax season comes around, rather than trying to organize a year’s worth of materials and information in a period of a few weeks. Below I have detailed six tips to help you keep your taxes and tax-related information organized throughout the entire year.
1) Think about taxes year-round
Let’s face it: most people do not like taxes. Thus, they take the approach of “out of sight, out of mind.” Many of us would much rather ignore our tax obligations until we absolutely have to think about them. However, it is in your best interests to keep taxes in the back of your mind at all times. Have you ever looked back over the past year at tax time and wished you had done something differently that would have been more beneficial for you on your taxes? Do your best to consider the tax implications of your actions all year.
2) Designate one location for tax materials
Pick one spot in your home or office, whether it be a specific desk, a filing cabinet, or some other area, and have that be your designated tax area 365 days per year. Even if you are bad about filing and organizing, if you have one specific area where you put any documents or information that will be needed at tax time, you will not have to go hunting when the time comes to use them.
3) Stick to and maintain a filing system
Pick a method of filing and stick to it. You may prefer an old fashioned filing cabinet, or perhaps you’d rather scan receipts and documents onto a computer and file them that way. Whatever the case may be, choose a filing system that works for your habits and then force yourself to stick to it all year.
4) Pay attention to changes in tax law
Take the time to follow the news and learn about any changes in tax law that occur. Tax law is fluid, and every year is a bit different. Note any changes that occur throughout the year as well as how they may affect you so that you are prepared for these changes come tax time.
5) Utilize technology
Technology can be your best friend when it comes to staying organized with your taxes throughout the year. Invest in helpful software like QuickBooks or specialized document scanners that automatically upload and organize information from receipts and other scanned documents onto your computer.
6) Create a paper trail
It is particularly important to have a paper trail to back up your expenses and deductions if you are self-employed or run a small business. If you are ever audited by the IRS, having a paper trail you can use to prove your tax claims will be invaluable. But a paper trail cannot be created in a short time just before taxes are due. It is a process you must continue throughout the year.
If you are faced with IRS tax issues this year, or if you need personalized assistance with tax planning strategies throughout the year, be sure to give me a call today to learn how I can help!
Written by E. Morgan Maxwell
Since beginning his own firm, Mr. Maxwell has continued a tax-law oriented practice encompassing a wide range of transactions, planning and dispute resolution. His dispute resolution experience includes involvement at all levels of the Internal Revenue Service (Examinations, Appeals, Collections, Office of Professional Responsibility, the U.S. Tax Court), the Pennsylvania Department of Revenue, the Tax Litigation Section of the Pennsylvania Attorney General’s Office, Pennsylvania Commonwealth Court, Common Pleas Court and local taxing jurisdictions in southeastern Pennsylvania.
