Prepping for Taxes: How to Reduce Time & Stress During Tax Time

Many people dread the first quarter of the year and just the thought alone of prepping for a tax return produces hives and panic. The following are tried and true tips, practices, and advice from a Certified Professional Organizer and an Advanced Certified QuickBooks ProAdvisor. Put those two levels of expertise together and it gives you one powerful opinion from real-life experience. We hope you enjoy these ideas to consider to reduce your stress level and make your next tax year a breeze.

• Don’t hop from one CPA or tax preparer to another. It makes it difficult for you and them. Show your loyalty and commit to one. Remember their busiest season is January through April. If you like to ask a lot of questions or meet in person, consider reaching out between May and December. Respect their cycle and busy season. You are more likely to get ahold of them or get a response when it’s not busy season.
• Don’t procrastinate. If you’re prepping every month all year long, tax time is a breeze. Waiting till the last minute to wade through paperwork and do bookkeeping is 90% of the reason you’re stressed. You are doing an entire year’s worth of work in a few weekends. That is not ideal on any level.
• Reconcile business bookkeeping monthly. Don’t wait till December or January to do a mad rush. If you’re behind, get caught up. We are experts in doing catch-up/clean-up bookkeeping work for small businesses and would love to help. Check out our services page.
• Organize and put away documents throughout the year. We randomly come across documents we will need for tax time throughout the year. File any tax-related paper right into a physical tax folder or a virtual online folder on your computer. Doing the same thing over and over is key. Using systems consistently provides you with organization and efficiency.
• Keep a list of where to grab your electronic tax documents. I keep a short list right inside my tax folder of all our banks, investments, mortgage companies, county property taxes, etc. Every year I know how to grab the tax documents from their websites.
• Track charitable giving all year long. This can be accomplished with personal money management software. It makes gathering all the data a breeze. It also prevents you from having to wait for each charity to mail you a statement. If your charity has an online portal to see your giving, then add it to your list in the point above.
• Track medical spending all year long as well on your personal money management software. You don’t know what the year holds and sometimes our medical expenses are so great we can claim a tax deduction. Again, if you record these expenses all year in Monarch or You Need a Budget or Quicken, it will make it easier come year-end.
• Don’t mix personal and business spending. Mixing creates so much extra work and wasted stress. Commit to spending out of the right account. If you keep your banking simple and organized, your wallet will be as well. Direct automated drafts to the correct personal or business account or credit card account.
• Between January and March, open your mail. Watch for tax-related documents to come through. Most of us assume it’s all junk or ignore it.

Being organized and avoiding procrastination pays off every time. Three benefits that are priceless of being organized around your tax preparation are the following:

1. It saves you money with your bookkeeper and accountant if they don’t have to fix things and wade through a mess to get your taxes completed. You’re also likely to get better service because, to them, your data is easy. Accountants and bookkeepers value organization. It yields a higher level of accuracy and makes their job way simpler.
2. It saves you time if you’re consistent in your habits throughout the year. Doing tasks right away in real time prevents hours and hours later when your memory has forgotten things, or you’ve misplaced things. Enjoy your Christmas break or your winter months leading up to the tax deadlines by avoiding the great pile-up.
3. It lowers your stress level. Disorganization and procrastination can lead to feeling out of control. When you are organized, you gain a sense of mastery over your schedule and environment, which boosts confidence and reduces anxiety.