How to Implement a Year-Round Tax System

tax advice

Every spring I wait until the last minute to get my tax return filed. I can’t find any of the papers I need and the whole experience is really stressful. How can I break my procrastination habit and make my tax return easier?

We too are guilty of waiting until the last minute and scrambling to pull all our documents together, when most information could have been compiled ahead of time. It’s far too easy to put tax and financial paperwork in the “deal with later” pile…except “later” never comes, and the pile continues to grow! Avoid the tax time-crunch and invest a few hours in setting up an organization system that will keep your financial paperwork on track year-round.

Implement an Intake System

Avoid a backlog at the beginning of tax-season by taking care of your documents year-round as they come in. Whether you choose folders, scanning into digital software, or a letter tray, sort documents into their appropriate location as they arrive to avoid the dreaded “later” pile. You’ll feel less frazzled when your files are clearly sorted and labeled, and will avoid wasted time searching for misplaced documents. Check out the three folder method or a more comprehensive one with multiple categories.

Schedule Regular Processing

Each week or month, set aside time to process the papers in your inbox system. Depending on how you work, this could mean entering the necessary information into bookkeeping software, condensing receipts into an expense report for your employer, or logging information into an informal spreadsheet. We know—but you’re busy and have so much work to get done! Remember how it feels to file your tax return last minute and motivate yourself to keep up with regular data processing.

desktop letter organizer

Monitor Your Status

Are your withholdings accurate? Will your current retirement contributions allow you to meet your retirement income goals? Have you been tracking your mileage? Evaluate your overall financial status on a regular basis to dodge any surprises come tax time. Either combine this with one of your regular processing sessions, or make a calendar date with yourself a few times a year to revisit your financial health.

Moll Carosel Tray

Plan Ahead

Make note of deadlines for quarterly estimated taxes, the deadline for filing an extension, when to file a Foreign Bank Account Report, and any other applicable deadlines. While you will hopefully be more organized year-round by keeping up with your filing and processing, you don’t want to miss any important deadlines that could have serious repercussions in the form of penalties. If you’re self-employed or own a small business, prepare an income projection and review your business plan.

By staying organized year-round, you’ll be able to file early and enjoy your stress-free spring.

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