It’s the most wonderful time of the year: tax season! All jokes aside, a 2020 study found that the majority of taxpayers dread doing their taxes. Taxes take time, can cost money, and many people find them confusing. They’re basically like homework for adults.
But taxes don’t need to be so terrible. Through years of experience and repetition, I have gained efficiencies to speed up the process. While you may not be at that level, here are seven ways to be more organized for tax season – so you can stop dreading the paperwork and get back to your life.
1. Gather as you go
Collect all tax-related information in one place as it arrives. When you receive an envelope in the mail with a tax document enclosed, add it to that spot immediately. You’ll be able to easily find it later on, which will help make your tax filing a smoother process.
2. Designate a place
Keep previous years’ tax information in a central location. In most circumstances, your tax filing this year will be largely similar to the previous year. For this reason you may want to reference previous tax documents to confirm specific numbers or even to see which documents were relevant. You can store your tax information in a folder on a bookshelf, a file in your safe, or even a “Box of Knowledge” in the closet. Pick one and stick with it.
3. Go paperless
If you are technically inclined, get your tax statements electronically. It’ll be faster, better for document retention, and help you streamline your taxes in future years.
4. Know what you need
Think about where your money is stored and any companies that may have a long-term relationship with your money. Check each of these places for tax-related information. For reference, if you have any of the following, you may need a related tax statement for each:
- A job: You should get a W-2 form, and if you received unemployment, you should get a Form 1099-G.
- Debt: A mortgage for a home (Form 1098), student loans (Form 1098-E), a personal loan that’s forgiven (Form 1099-C), other loans.
- Daycare: All the receipts you’ve saved from day cares or after-school programs showing your expenses.
- Bank accounts: Savings accounts and interest-earning checking accounts (1099-INT form for interest you’ve received).
- Investment accounts: Depending on what types of accounts you hold, there can be several forms to watch for (1099-B for capital gains, 1099-DIV for dividend income, 1099-R for retirement …….