Tax season doesn’t have to be filled with worry or concern. In fact, filing your taxes can be cleaner, faster, and far less overwhelming with the right systems and tools in place. To avoid costly mistakes and stay ahead of deadlines, many individuals and small businesses use smart organization tools and habits.
Read on for the best organization tax tips for individual filers to keep you prepared and confident.
Organization Tax Tips for Individual Filers
More than half of Americans feel stressed during tax season, mostly due to the various documents they need to gather. It’s easy to lose track of essential items, particularly receipts that you forget where they are.
Albeit many accounting software platforms like QuickBooks provides organization tax tips for individual filers and small businesses, not every uses these systems. Even so, whether you are looking at your business or your individual taxes, The Ray Group is here to help you stay organized.
Below, you will find some of the most common questions we get about individual tax filing preparation, as well as recommendations for what to do.
1. Maintain a Year-Round System
One of our best organization tax tips for individual filers is not to wait till the last minute to know where your essential documents are. If you wait until January to start organizing, it can lead to stress and feeling of overwhelm.
Instead, use a year-round approach like keeping a dedicated digital or physical folder for tax-related documents. For those with freelance earnings, make sure you are tracking your income and expenses throughout the year.
Don’t know which documents you need? Here are the most common top three categories of items you should gather first:
- All 1099s, W-2s, and other official FTB and IRS forms.
- A summary of your income and expenses from all rental, business, and farm properties.
- Any other items that were relevant for the previous tax year, such as tuition payments and charitable contributions.
You will also need to remember critical transactions that you’ve made throughout the year which can affect your taxes. For instance, purchases, life events, property sales, dependent changes, etc.
2. Organize Your Documents Electronically
Another one of our top organization tax tips for individual filers is to use secure technology tools to make the start of tax report easier. For your convenience. These tools provide a customized list for each filer based on the prior year’s filing.
To protect your information due to the prevalence of both mail and identity theft, we use TaxCaddy as a form of electronic organizer. This convenient and secure program allows you to upload scanned copies, photos, and digital files of your tax documents.
If you have never used TaxCaddy and would like to start, please go to website and create an account. You may also want to download their mobile app for added convenience on the go.
In the interest of document security, The Ray Group utilizes TaxCaddy rather than delivering paper organizers to clients. However, if you prefer that we mail an organizer to you, please get in touch with our administrative staff as we are happy to assist you.
3. Deliver Securely with QuickBooks
We deliver returns electronically via QuickBooks, with paper copies available upon request. QuickBooks allows for seamless electronic receipt of your tax returns. As part of the delivery process you can connect to State and Federal tax sites and schedule electronic payments. Save your return during the electronic delivery/receipt process and access past returns anytime.
However, if you prefer to meet in person, we would love to see you and discuss your documents together. Contact our office for an appointment.
4. Best Practices for Staying Organized
Keeping a folder near where you collect your mail and adding anything related to your taxes in that folder is an easy first step you can take. While this may seem simple, small consistent habits make tax season far easier.
We also recommend scanning documents into TaxCaddy as soon you receive them to stay organized every step of the way. This way, all your tax information is centralized before tax time.
By using QuickBooks to track income and expenses for your business, farm, or rental, you can stay on track throughout the year. Reconciling your bank accounts monthly catches any omissions and helps keep everything current.
Smaller businesses and rental properties can also use QuickBooks. But you could also use Excel to monitor income and expenses. In fact, Microsoft Excel can make creating your financial summary effortless.
Missing Documents?
Losing track of essential documents can happen to anyone. First thing to remember is that you can request additional copies of them. For instance, you can request W-2s from employers, and if needed, you can get escrow closing statements from title companies.
If you do not have all needed 1099s, they can be requested from issuers, including financial planners. One of the perks of using TaxCaddy is that 1099s from your brokerage accounts can be linked directly into your TaxCaddy organizer with a few simple steps.
By doing some year-end planning with us in November and December, you can estimate your income and have a sense of what your taxes will be before the year is done.
When Are Documents Due?
Your 1099s and W-2s should be mailed to you by January 31st. As you gather your documents, please share them with your accountant right away to allow for early and good communication. If we prepare your tax return, plan to have your tax information to us no later than March 2nd to ensure timely completion and filing.
Investment account 1099s often have revisions issued after January 31st. But you don’t have to wait for these to arrive before bringing in your tax documents. If you have 70-80% of your tax documents ready, feel free to reach out to your accountant. We’ll factor in the additional documents as they arrive.
Can I File An Extension?
Yes. Filing an extension gives you extra time to pull your documents together without increasing your audit risk (contrary to popular belief). So don’t worry! If you need additional time due to business pressures or other life circumstances, filing an extension is completely acceptable.
If you know that you won’t be ready to file your return by April 15th, please communicate this to your accountant as soon as you can. An extension can be filed as early as February 1st.
Keep in mind that even if you file an extension, any taxes due with your return still need to be paid by the original deadline. To file an extension more accurately, send your accountant an estimate of your income so that they can more accurately calculate the taxes due at the original deadline. And remember to pay any first-quarter estimates for the upcoming year.
Get in Touch
If you would like more organization tax tips for individual filers, we’re happy to help. Our team is here to give you the expert advice and the supportive service you need to make tax time a breeze. Call us today.
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