Why Tax Planning is a Year-Round Endeavor
If you find yourself scrambling to gather documents to make deadlines during tax season, then you might want to consider organizing throughout the year to make your life easier. Tax planning should never be a last-minute endeavor, because you might miss something important that could save you money! As a best practice, you want to keep organized and collect relevant documents throughout the year, not just right before the deadline. Not only will this alleviate your stress, but it will ensure your tax preparer has everything they need to get you filed on time.
What should you be saving year-round to make tax season more organized? Here are a few examples:
- Child care costs and receipts
- Charitable contributions
- Medical expenses
- Tuition costs and receipts
- Child support or alimony payments
- Business expense receipts
As we mentioned, failing to submit relevant tax documents means you could be losing money. These could be critical deductions or credits that can be applied to your tax return to save you hundreds or even thousands of dollars. Below are a few helpful tips to keep you organized and in the mindset of saving tax documents year-round.
Keep Everything in One Place
You should have one central location to save and store your important tax documents. This spot should be easy-to-access with plenty of space to fill up as the year moves forward. As you move through your work week, be sure to store any relevant receipts in this designated place, so you won’t have to go searching for them come tax season.
Decide How Documents Will Be Organized
There are two options when it comes to how your tax documents should be organized: old school or digitally. Old school means you will keep receipts and relevant documents in a physical spot, like a shoebox or office drawer. Or, you can organize your files digitally. There are many new apps and software programs on the market that will allow you to scan and save your tax documents digitally. We recommend the latter, so that everything is online and easy to share with your tax preparer when the time comes.
Review These Documents Regularly
When you designate a spot to store your tax documents, don’t just throw the receipts in there and not look at them again. Practice regularly reviewing your tax information throughout the year, so you can stay on track with your financial goals. Carve out time once per month to sit down and review how you’ve been spending and also brainstorm any potential deductions that may not be front-of-mind.
Tax planning can be a stressful process, but only if you fail to prepare throughout the year. The experts at Taurus CPA have plenty of solutions to keep you organized year-round. So when tax season arrives, you can feel confident that you are prepared and not missing documents that could save you money!