It is that time of year again, the tax man cometh. Are you feeling anxious, frustrated and afraid about how difficult this process will be? Well, you have plenty of company. Pew Research reported in 2013 that 30% of us dislike doing our taxes and 26% of us hate doing our taxes. They cite everything from it being a boring chore, to the convoluted tax structure as reasons why. Especially notable were responses about the hassle of collecting and putting together the tax time documentation.
Has disorganization and lack of a system for collecting your documentation been adding to the pressure and the anxieties around this task. Is the desire to procrastinate beginning to build? Is fear of the unknown, and the shame of not having this all taken care of keeping you up at night?
First of all, forgive yourself for what is in the past. You did not have the right system and that can be changed, but don’t let that get in the way of completing this important job.
Make some appointments with yourself to work towards getting your taxes completed. When the scheduled time arrives, set a timer and work your way through these tasks one at a time. Take regular breaks to keep yourself fresh during the process. When your allotted time is completed, assess if you want to continue and do more in this session, or make another appointment at a later time, to continue your work.
Now, start by identifying a list of what documents you need to collect to complete your taxes. Once you are clear about what you are looking for you are ready to begin. You might even find this helpful to share this with your spouse or business partner, so they can help with the gathering of information step. As you develop your list, note the various paper collection points that you will need to search to find the necessary documents: your office, the front hall closet, the kitchen or dining room tables, in bags and boxes in the basement or attic, under the bed, the trunk of your car, or any other area you put paper when you were trying to get it out of the way. Once you have completed looking for the paper sources, don’t forget to check your online resources for things you may have to download, or that you scanned and saved for tax time.
Next, create an area to sort these documents into the proper categories, this could be a table top file, a filing cabinet or and accordion file.
If you itemize your deductions, some examples of sorting categories might include, mortgage interest, home mortgage points, real estate taxes paid, state and local tax payments, safety deposit box rental fees, charitable contributions, and medical expenses. There are many more deductions you may be eligible to take, they vary depending on your circumstances. For a comprehensive list of deductible items visit the IRS website.
Once all the documentation is ready, you can move on to the preparation method of your choice: CPA, Enrolled Agent, Online or Boxed Software, or completing them yourself. Which one is right for you only you can decide?
Remember the professionals are there to help you, the tax code is complicated, and the time and headaches you save yourself by hiring a professional may just help you land that next big contract.
Now that you have looked for, located and categorized all the paper from 2013, it is the perfect time to set up these same files for 2014 so you can collect these documents all year long and never have to face such a daunting search again!