Getting Organized at Tax Time
During the last month, you’ve probably received a flurry of important
tax-related documents in the mail. They serve as a reminder that the
deadline for submitting your tax return is looming ahead on April 15. Do you
have everything you need? Getting your tax return done can be stressful, but
the Iowa Society of Certified Public Accountants offers this advice on what
you can do to better ensure that your return is completed on time and
accurately. They also offer tips on ways to plan ahead so you can take some
of the stress out of tax time next year.
Get Organized
By the beginning of February, organizations should have sent you many of the
documents you need to complete your return. This will include a W-2 from
your employer showing what you’ve earned this year, Forms 1099 reporting any
additional earnings and investment income you’ve received, and statements
from your mortgage company, bank, or other lender with details that you’ll
need for your return. You may also receive other paperwork, documenting
medical bills you’ve paid and charitable donations or financial investments
you have made. CPAs recommend that you set aside all of this material as
soon as you receive it in a special folder or envelope so that you don’t
have to search for it when you’re ready to do your return. In addition, find
last year’s tax return so that you have it handy for background information
and to see what further documentation you need based on what was used last
time.
Make Order out of Chaos
Gathering your documentation is a good first step, but it’s also important
to put it in workable order. Sort the paperwork into different files or
folders based on whether it relates, for example, to income or deductions.
Take statements and papers out of the envelopes in which they were mailed so
they are easier to identify and access. You might also want to make a list
of the documents you have and the amounts involved in each case. That will
make it easier for you or your CPA to get a timely start on your tax return.
Prepare Throughout the Year
Not all of the documents you require for your tax return will come in the
mail in January and February. For example, you may need credit card or bank
statements and records of cancelled checks that you receive during the year
that show purchases or transactions you have made. You might also use
receipts that verify items you’re deducting or donations you have made. You
should also set aside documents relating to major events during the last
year, including the closing documents and mortgage information for a home
purchase. That’s why it’s a good idea to create a tax file for next year
today, to gather the material you’ll need for next year’s return now. As you
gather this paperwork, remember, too, to ask your CPA about any tax savvy
steps you can take now to reduce next year’s tax burden.
Stay Informed
It’s easier to organize your tax return information if you understand more
about how the tax law affects you. The CPA profession’s 360 Degrees of
Financial Literacy program provides answers to many taxpayer questions,
including details on recent changes in legislation. You can find more
information at
www.360financialliteracy.org.
Your Local CPA Can Help
Many people turn to CPAs to help them complete their tax returns and perform
tax planning for the coming year. Remember to consult your CPA with all your
tax or other financial questions. If you are looking for a CPA, go to
www.findanIowaCPA.com.
