It’s almost tax season, and I’m looking through all of my credit card bills for last year as well as my check book trying to add up medical expenses to see if we have enough to qualify for a tax deduction. This easily takes me several hours one afternoon.
I don’t know about you, but come the beginning of the year, I tend to scramble to get all of my tax information together. This process, off and on, can take me a few months. Then, after the tax season is over and my taxes have been filed (usually in April), I take a nice long reprieve on taxes before the cycle starts all over again at the beginning of the next year.
However, I’ve decided to break the cycle and take steps now to make next tax season easier. By working little by little, collecting tax information all year long, I should be able to save quite a bit of time come next February and March when it’s time to file taxes.
Here are some strategies I’m using:
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Keep A Spreadsheet Of Medical Expenses
The last few years, we’ve had high medical expenses. This year, I’m going to keep a spreadsheet that lists all of our medical expenses by type and month. Then I’ll know at the end of the year whether we can qualify for a medical deduction.
Keep Current With Business Tax Records
I have a small side business doing work as a freelance writer and virtual assistant. Because this business is small, I tend to get lazy with my bookkeeping. Usually, I wait until the end of December and do the books for the whole year.
As you can imagine, this is much more time consuming than if I had just kept up with it every month. This year, I’m keeping my books up-to-date so I don’t have a big task facing me at the end of the year.
Plan Retirement Contributions
My husband and I aren’t getting any younger. This year, we were able to contribute to our Roth IRAs, but we did it this year to count for the last tax year.
This year, I’d like to spread the contributions out so I can maximize how much money we’re able to put into our Roths.
Keep All Receipts For Charitable Deduction
We give to our church weekly, and we get a statement for that giving at the end of the year. However, we also tend to give lesser amounts throughout the year to different organizations, and I am bad at keeping track of those.
This year, I plan to develop a spreadsheet for these. I’m also going to take the time to write out the value of items that I donate to places like Goodwill so I can also claim that tax deduction.
Change Our Withholding
I still don’t have our taxes done for last year, but when they’re finished, I plan to evaluate our tax withholding status. If we’re going to get a big refund, we’ll adjust my husband’s W-2 so we get more money with every paycheck. However, we just adjusted this last year, so hopefully we won’t get a large refund this year.
Tax season can be stressful, but it doesn’t have to be time consuming. If you’re a bit of an unorganized tax filer, as I am, take steps now to get more organized for the coming year. You’ll be so glad you took the time to do so when your done gathering your materials for taxes in just a few hours instead of days.
What steps do you take to make filing your taxes easier for the next year? Do you have a system in place?
Just curious, when can you deduct medical expenses and donations? I never got a straight answer to this. I make about $75K and last year, we spent about $12K in medical expenses. I am not too sure if we could have deducted that but we took standard deductions.
I am very bad with everything paperwork, so I am happy that all our firm’s money is tracked by our accountant. She’s the one doing all the work and just sends us an email telling us what to pay and in which account. I’d be dead otherwise :D
Luckily here in Australia our tax system is really simple. It’s just a bunch of drop-down forms on the government’s website and generally takes less than an hour to complete.