Do you end up filing your income taxes on the last possible day, sometimes even at the last possible hour each year? If so, it's time to clean up your act. Why put yourself through the stress of last-minute filing when you can make a plan now, follow through with it, and be happily spending or saving your refund next year when April 15th rolls around?
Start by asking yourself what goes wrong or delays you. Are your tax papers scattered around your home? Have you moved? Have you held several jobs and found it hard to obtain all your W-2s? Do your living circumstances change frequently? Has your marital status changed? Does a family member refuse or forget to give you important information or documents? Is a daycare provider or religious institution lax in giving you a written yearly accounting? All these can affect getting organized in advance.
Or is your problem finding the time in January, February, or March to go to a tax preparer? Although there are long waiting times in certain volunteer tax preparation spots, others take appointments. A little digging can put you in contact with whatever agency runs each site and you can learn where your most efficient tax prep venue will be.
Accountants of course will take appointments. Get recommendations and look for an accountant in the summer, once they've filed their on-time returns and taken a vacation, and aren't yet working heavily on the automatically extended returns due in October. Then agree on an appointment date for next year and mutually generate a list of items you will bring with you when you do meet with the accountant.
If you do your taxes yourself, get into the habit of paying attention to announcements of new tax rules, so you'll be prepared for them come next January. Download any new forms and instructions and read up on changes. File change of address forms if need be. Get disability letters and divorce decree information about dependency and the Earned Income Credit organized. Determine if your projected income for the year qualifies you for free filing by a commercial tax preparer, and if the complexity of your return next year will require a professional.
If the reason you edge up to the tax deadline each year is that you're very busy, make an appointment with yourself. Block out the time in advance. In fact, make two appointments. The first is for locating all your documents, buying tax software, or downloading tax forms and instructions from irs.gov and from your state tax department website. You also should determine how much time you need to do the basic work of filling in the blanks, calculating the dollar figures, and checking your accuracy and completeness. The second appointment with yourself is to do the actual tax returns.
What about all those papers that must be organized before you can even start your tax return? Start organizing them now, when they haven't yet grown to be a huge stack. As I've described in a prior post, Record-Keeping Tips, any organization method that works for you is the right method, as long as you use it consistently.
Although many of the tax documents you'll need for your tax return will be received next January or February, you can prepare for them now. You can create a folder or large envelope in advance for all employment documents such as W-2s and 1099s, or for retirement documents such as 1009-Rs or 1099-SAs. Then, when the annual statements arrive, you'll know exactly where to put them.
Do the same thing for any other kinds of receipts you'll need, such as real estate bills and proof of payment, personal property and local fire and ambulance taxes, medical bill copays, and more. Remember that if you plan to claim mileage for medical, charitable, or self-employment travel, you need to keep a notebook in your car and enter the details of each trip on the day the trip happens.
Of course, you might just hate taxes and always want to put them off until the last minute. Even though taxes don't take any less time to do in April than they do in March, some people procrastinate out of sheer cussedness. It's our way of shaking our fists at the governments that tax us. But if that attitude leads to a pressured April next year, ask yourself if a little advance planning and organizing will make your next tax day more pleasant.