Tax season can be a beast, especially if you are self-employed or have more than one job (side-hustles included). Growing up, my dad was self-employed most years. So, every year, my sister and I got to do (super-fun) volunteer work helping him get ready for tax season.
Disclaimer: I am NOT a CPA. This blog is not tax advice; it is advice for organizing for taxes. In no way, can this blog or its writer be held responsible for your tax issues. Talk to your CPAs.
Now that I have covered my butt legally, let’s get into a few tips for organizing tax documents.
First of all, make a list of all the tax documents you need. If you are an employee, you will need a series of pages that are very different from those who are self-employed. College students will also need to wait for 1098-T forms, which list grants, scholarships and loans. Staple your master list to the outside of a Manila envelope. As the forms come in, slip them into this envelope and check it off the list. Once you have all of them, you can proceed to do your own taxes or enlist your CPA.
Second, keep your receipts. If you are self-employed, this is VITAL! Mileage costs, hotel fees, business clothing, lunch and coffee meetings, and even a piece of your mortgage can all be labeled as business expenses. If you use a room in your house as a home office (that you actually operate out of), measure it and calculate that square footage as a business expense. If you want to take it one step further, keep two separate envelopes, one for your business receipts and one for your personal expenses. I would advise keeping each month in a different envelope as well. (So 24 envelopes). When tax season rolls around, scan in those receipts.
Third, keep track of your donations. If you’re self-employed particularly, donation to charity can be huge tax write-offs. I don’t just mean monetary donations, either. If you get rid of clothes or furniture or whatever else, Turbo Tax has a feature where you can put in the estimated value of the donation and receive a write-off.
There are several different systems you can use to organize as well. You could use an envelope system, a digital system, or whatever system works for you. I personally have always used the envelope system, and it works just fine since taxes seem to be the last thing that will ever go digital.
Double check for yourself how many years you should store your tax documents. I have found it easiest to store those documents in a hanging file in a bankers box labeled with the year.
Once you have submitted your taxes, print out the confirmation and tuck that into the envelope. If you file extensions do the same. Notate what documents you receive to keep track of them. Really, tax season is all about being intentional and not procrastinating. Don’t wait until the last minute. Don’t just stack the documents you get on a junk shelf in the kitchen until they get splattered with grease and you lose them.
Note: Another effective method for organization is a crate system. Buy some hanging file folders.
Use a cheap plastic crate as your active tax file cabinet. This should help keep everything fairly easy to access and neat.
I hope this blog has been even slightly helpful. If you have an y questions or a topic you would like me to blog on, send me a comment or message me through my Facebook page.
Until next week,
Mrs. Ashley Seguin
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