Tuesday, March 26, 2013

Tax Filing Made Easy

During this time most people in the U.S. are usually working or finished their yearly tax filing. I wrote the list below a little while ago so I thought it's good time to post it now in case any of you need a little direction or encouragement on working on your tax. 

How to get your tax done faster:
1. Set a dateline then tell someone about it and have him/ her keep you accountable. My patient husband usually give his wife until the end of March before he start asking hourly, "Have you start working on our tax yet?"


2. Over the years, label and keep financial docs in appropriate folders. Above is the picture of  how I organize ours. Keep tax documents (W-2, 1098, 1099, and so on) on separate folder. In case you are interested on the past I wrote how we eliminate paper clutters.

3. Use money management software to keep track of your budget, income, expense, donation, saving, investments and so on. I use Quicken to manage ours.

4. Make a list of the work that need to be done. For instance, mine are:
- Transfer money to Roth IRA,
- Finalize and print out our Quicken report from last year
- Buy Turbo Tax online {file by March 19 and save} 
- Work on it and get it done.
- Shred any unimportant or old documents.

5. Make sure you have all the documents you need: W-2, 1099s, charitable receipts, and so on.
6. Focus. Restrain from doing something that you like such as blogging {ahem}, reading blogs, or opening Facebook until you get it is finished.

7. Use easy to use software. Even the CPA offices use software so save your time and your back by using tax software instead of filing them on paper. I use Turbo Tax to do ours.

8. Go through all financial documents that year and get rid of some that do not need to be save. For instance, most likely we don't need to keep our cell phone, electricity, water bills, old receipts, etc. Then, I usually keep the rest inside one folder along with a copy of our tax return.

9. Shred unimportant old documents. We personally only save important documents: home, savings/ investment, and such. The IRS would only go back 3 years, the most is 7 years for certain cases. More information can be found here. *Update my tax accountant friend wrote in the comment: "We actually advise clients to save their supporting docs for 7 years and the actual returns indefinitely. But most of the time it's for the purpose of them having to go back for estate issues or to retrace cost basis." - Thanks, Yun!

10. When you're done, celebrate and give yourself a little reward. Boba tea or orchid for me. Yay! 

Feel free to write in the comment if you have anything else to add to the list

Now please excuse me I have to focus and start working on our tax. :)


2 comments:

  1. We actually advise clients to save their supporting docs for 7 years and the actual returns indefinitely.
    But most of the time it's for the purpose of them having to go back for estate issues or to retrace cost basis.

    ReplyDelete
  2. Thank you, Yun. Thankful to have a tax professional to clarify. I'll add your comment on the post.

    ReplyDelete