Every year my husband and I get our taxes done the first week of February. Why? Planning of course. If we owe to the IRS, submitting our tax return in February gives us adequate time to plan for the amount we owe. If we are getting a return, then we can pray and decide how God wants us to use it that year.
Our taxes are very complicated since my husband is a minister, so while I would rather save us the money and do it ourselves, I invest in having a tax company do it. Here are a few tips that I do each year to make sure that I’m ready by the beginning of the year.
Create a year-round filing system: Simple tax organization can mean substantial savings and deductions. Find a system that works for you and stick with it. I have found that making individual folders that are specifically labeled helps me. I also have an excel spreadsheet to itemize our housing and medical deductions. Here are some examples of categories that you’ll want to keep track of paperwork and receipts for:
- Real Estate
- Profit/Loss for small business
- Charitable Donations
Collect tax related paperwork in one spot as it starts to roll in: From January to early February your tax documents should come in the mail. Keep a folder to collect all of these documents in one place. Here are some examples of the forms you should see:
- Mortgage interest statements
- Bank interest statements
- Real estate tax statements
- Investment statements
- Receipts for charitable donations
Prepare your documents for your tax professional: It may save you money to have everything well organized and paper-clipped. I attached sticky notes labeling what documents go with what deductions. All of my receipts are clearly itemized on my excel spreadsheet so that I am not just handing them a stack of receipts that they have to go through. I know that my tax preparer appreciates this, and like I said having everything together and organized will help you to avoid errors and ensure that you receive all of your deductions.
A second opinion doesn’t hurt: If you do decide to prepare your taxes yourself and the amount doesn’t seem correct to you, it may be beneficial for you to consult a tax preparer to go over your documents. It will probably cost less if you have everything prepared and are wanting a second opinion, to see if there are any deductions that you may have missed.
Don’t wait until the last minute! I don’t recommend being the one waiting in line at the post office on the 17th, trying to get your taxes postmarked in time.
These are a few tips that have worked well for my family, please let us know if you have any tips that help you each year.