Why Not . . . Prep For Tax Season?
Wednesday January 30, 2013

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Over the past weekend, one of the few things I needed to do besides reading was to organize my taxes.

And while the word taxes initially is deemed ugly, I try to remind myself of the many benefits I am investing in – education, national parks, safe roads, protection, etc. Regardless of how tax season makes you feel, it’s a task that cannot be avoided, and often times, it can be a moment to celebrate if you are of the 52% of Americans who receive a return instead of a bill. Regardless, the foundation of contentment is financial security, and so long as you know where your money is going, you know where you are capable of traveling as well.

Today, I’ve rounded up a list of tips that have worked for me to help keep me organized throughout the year in order to make January and February a bit less stressful come tax season.

1. At the beginning of each year, create a file in your office labeled “Taxes 2013” (the respective year). As the year plugs along, whenever a check stub, business document or important tax document such as a 1099, 1098, W-2, giving statement from a charity arrives and something that I will want to have a record of, I file it into the correct folder.

2. Also, create a separate folder for receipts for each year. Be sure to save this file for seven years, just in case you are audited. (Click here to learn about what you should keep and for how long.)

3. Use the tax organizer from your CPA. If you have an accountant, they will undoubtedly send you a tax organizer (or worksheets) to fill out all of the necessary information prior to coming into their office. Take the time at home to fill out the work to save yourself time which you will be paying for when you walk through the door. (Each accountant’s system for charging is different, so inquire with your individual accountant for details.)

4. Teachers and students, keep track of your expenses (often union dues are deductible as well). Most states have a maximum amount you can deduct for education expenses, union dues, etc.

5. Create a checklist. Each January as W-2 forms begin arriving in my mailbox, I make a list of all the items I expect to receive and information I will need prior to scheduling my appointment with my CPA. Here is a list of things you may need to put on your list:

  • W-2s from your employers
  • 1099-INT (for interest earned)
  • 1099-DIV (for dividends you received)
  • 1099-B forms (reflect transactions involving stocks, bonds, etc)
  • 1099-MISC forms (for any income from self-employment)
  • K-1 forms (if you have a partnership, small business, or trust)
  • 1099-SSA (if you receive social security)


  • medical receipts
  • receipts from charitable donations
  • education receipts (as mentioned above)
  • moving expenses
  • mortgage interest
  • childcare costs

Once everything has arrived, get started or schedule an appointment. The earlier you file, the quicker the return will be deposited or mailed to you.

6. Note important deadlines. While April 15 is the most important, January 31 is also one to keep in mind. If you don’t receive your expected W-2, 1098 or 1099 forms by this date, contact your employer, previous employer and banking institutions to inquire about their delay. By law, you must receive them by January 31st.

7. Choose the best filing option for you. While my preference is hiring an accountant, one my family has worked with for years, regardless of your choice, make sure you know what you are going to do well in advance of April 15th. While e-filing, using a tax filing software program, filling out the paperwork by hand yourself are all options, filing late is not (without significant penalties, unless you file for an extension). Remember the goal is to keep it simple and make sure you have done it right the first time.

Small Business Owners/Sole Proprietors

1. If you work out of your home, keep track of how much you pay for utilities, mortgage, repairs, etc as you can deduct a portion of your expenses. Click here to learn more.

2. Keep a separate budget for your business expenses. Ideally you will have a separate checking/credit account as well. I keep an Excel spreadsheet and each month I keep track of the expenses paid out and income coming in so that when January arrives, I can quickly assess my total income and search for the receipts necessary.

3. Create a system for your receipts. Each time a receipt is received, be sure to label it with the event in which it coincides – trip to NYFW, meal with potential client, etc.

4. Make a plan for paying/saving for taxes that will be owed. Based on your tax bracket, when tax season arrives, you will need to pay taxes based on your income. Either decide to set aside a certain percentage each time income is deposited or continue to build your savings, so you are able to make the payment(s) when they are due.

~Full Disclosure: Because I try to reduce my stress and responsibilities, I have always chosen to take my taxes to a CPA, one that I trust and who can answer all of my questions as he stays up on the constantly changing tax laws. The low fee I end of having to pay him each year is worth the worry I might have experienced had I relied on myself to read all of the laws and forms correctly. This by no means is to imply you can’t do them on your own.

~Why Not . . . Get Organized? (three part series)

16 thoughts on “Why Not . . . Prep For Tax Season?

  1. Well, tax season means something different to me than most because I am a CA here in Canada (equivalent to CPA in the US, though our name is changing to CPA in July), so for me it means nights and weekends of work! So while some of you may complain about the work it takes to get your tax stuff together, trust me, that’s a heck of alot better than all of the work I have to do over the next several months!

    Like lawyers, we charge for the time that it takes to get things done so I can certainly recommend as Shannon has here to get your stuff organized!! I can’t tell you how people provide us with unecessary documents, missing documents, etc. and the amount of time it takes to chase people can really add up and then you end up paying for all of that time.

    The one aspect of tax season that I do enjoy is getting a little refund each year, and when it’s over, our office has it’s quiet period and vacation time is coming so it always feels really nice after we’ve worked so hard:)

  2. P.S. On the topic of doing yourself vs a CPA, in my personal experience, most people do not have particularly complicated tax returns and there’s absolutely no reason why you can’t either complete it yourself with an online program or package (these are designed to walk you through and cover all bases by asking you the right questions). If you really feel uncomfortable about this, you can always take it to say, H&R Block which will have a much lower fee and chances are they will pick up on everything that a CPA would. Most of the tax returns I do, I usually end up thinking to myself that if I were this person, I’d be doing on my own. If you have an unusual situation that’s one thing, but in most cases….anyway, that’s just my opinion, I totally understand those who would rather just pay and avoid the headache, and maybe the fees differ depending on where you go, but based on what I see, it seems pretty expensive for straightforward tax returns that you could just take one evening to do.

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