If the thought of preparing or filing your taxes causes you to break out in a cold sweat, here are 10 simple tips to make the process easier:
1. Keep a catch-all folder in a central, easy location, to collect relevant papers, receipts and documents throughout the year. At the end of the year, there’s no scrambling to locate them—they’re all in one place.
2. Write notes on receipts. Before you stick receipts into that folder, write a quick note about what the expense was for. For example: “Lunch meeting with Sue about marketing strategy.” When you or your accountant reviews your expenses, it takes guesswork out of the process.
3. File online. Reduce your chances for miscalculations and speed up the processing time for your return by filing online. Plus, it’s green! Make sure your software is current—the laws vary year by year.
4. Use a separate account or credit card for expense spending. If you have a lot of regular expenses that are tax deductible, it’s best to use a separate bank account of credit card to pay for them. It helps keep your financial records more clear, which could come in handy if you are ever audited.
5. Ask, don’t guess. If you have questions on your taxes, ask for advice instead of guessing. There are a lot of free resources online, including from the IRS.
6. Make charitable donations with a credit card. Not all charities are good at providing receipts, so use a credit card when possible. Not only will your credit card statement serve as a valid receipt, you can earn rewards or points for your donation!
7. Use year-end review reports from your credit card. Most credit card companies offer a helpful year-end review of your spending. This is important to review because it’s broken down into categories that are helpful for tax preparation. It’s likely that you’ve missed a receipt or two, so be sure to double-check!
8. Consider changing your withholdings. If you regularly end up getting a huge refund or owing a lot each year, you might want to think about changing your W-4 withholdings to even things out.
9. Take advantage of flexible spending, IRA contributions, and college savings plans. These programs enable you to put pre-tax dollars away for medical expenses, retirement, or your kids’ college funds, which means that you owe less tax on the money that’s left over!
10. Treat yourself. Once you’re done and filed, treat yourself to a batch of warm cookies. That’s right, an entire batch. It’s a free country, and you deserve it!