Finance

Everything You Need to Stay Organized and Prepared for Tax Season

Written by Amy Boyington | March 31, 2021

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We are knee-deep into tax season, which ends on April 15th. It’s one of the most dreaded times of the year for many, but guess what? It doesn’t need to be! Feeling prepared for tax season boils down to keeping yourself organized all year. When you have a system in place for tax preparation and filing, you’ll feel well-prepared to handle whatever tax season throws at you.

Organize Your Documents All Year

Organization is a must for tax preparation. Rather than scrambling to pull together your receipts, income information, and proof of expenses when you sit down to prepare your taxes, you’ll make your life a lot easier by keeping this information organized through the year.

Make a Spreadsheet

Whether you have a simple or complex tax situation, you can benefit from keeping a spreadsheet that tracks your income and expenses. Make a free spreadsheet using Google Sheets to keep your income information and potential deductions all in one place. You can also find free budget templates in the Google Sheets Template Gallery. Organize it by week, month, or quarter, depending on what makes the most sense for you and your tax situation. Then, update it frequently. It’s best to add everything when it’s still fresh in your mind to make sure you’re not missing out on important deductions.

Scan and Print Important Documents

A printer/scanner combination is one of the most valuable tools to have in your home for tax preparation. Use one product to print documents you need to file, like receipts from online purchases, and scan receipts and other documents you want to add to your digital library. The HP OfficeJet Pro 9015e All-in-One Printer ($229.99) offers wireless connectivity, touchscreen printing, and an automatic document feeder. With capabilities for scanning, printing, copying, and faxing, it has everything you need for tax preparation.

Keep Documents Organized in the Office

Rather than toss your receipts and tax documents into a file cabinet haphazardly as you get them, use colored files to keep them separated by type. For example, you might use green for charitable donations, yellow for pay stubs, and purple for mortgage documents. First, list how many types of documents you need to file. Then, assign them each a color. Office Depot has an array of colored filing folders that are perfect for the job. Need a filing cabinet to hold your folders? The Bradstone 3 Drawer White File Cabinet from Home Depot ($169.00) fits seamlessly into your home or office decor without looking like a file cabinet. Still, it has plenty of space to hold your tax information and other important documents.

File Documents Digitally

Having digital copies of your tax documents can give you peace of mind that your information is always available. Consider using your printer/scanner combo to create digital copies of all physical paperwork. Then, store them in the cloud for permanent access on all your devices. DropBox is an excellent service for cloud storage, but you can also use Google Drive for free with 15 GB of space. When you’re ready to file taxes, you’ll have access to all of your documents from your phone, computer, or wherever you prefer to grab them from.

Alternatively, you can use a service like QuickBooks. This digital program is perfect for people with more complex tax situations who have a lot of income and expenses to organize all year. Connect your bank account that handles your income and expenses, and QuickBooks will work its magic to sort everything into categories, taking some time off your hands.

Stick to an Organizing Schedule

Stay on top of your document filing process by creating an organizing schedule. This might be monthly or quarterly, for example, depending on how frequently you have new paperwork to file. Or, you might choose to file and arrange your documents on a schedule that aligns with your work paydays, like bi-weekly. On the day you choose, update your spreadsheet, make copies of and scan documents, and file everything away. Consider using a dry erase board calendar (Walmart.com, $11.97) to jot down reminders for yourself.

Prepare for Filing

Now that you have a plan for year-round tax document organizing, it’s time to prepare to file your taxes. Because you already have everything you need in their places, this part should be a breeze! For more tax filing guidance, head over to our guide on Essential Tax Tips for 2021.

Gather Your Documents

The documents you need to file your taxes will vary, depending on your tax situation. If you hold just one job and don’t have many assets or expenses, filing your taxes should be relatively straightforward and won’t require a bunch of paperwork. However, people who own homes, purchase or sell stocks, own a business, or have other complicated tax situations, will likely have more items to file and spend more time on their taxes.

Here is a checklist of documents and information you’ll need to file your taxes (although some may not be applicable to you):

  • You and your dependents’ Social Security numbers
  • All income information, including W-2s and 1099s
  • College tuition expenses
  • Mortgage and property tax information
  • Medical bills and information about Healthcare.gov health insurance premiums
  • Unemployment information
  • Charitable donations
  • Educator expenses
  • Child or dependent care expenses
  • Business income and expenses
  • Home or separate business office information
  • Gambling income
  • Paid or received alimony
  • Energy-saving home improvement documentation
  • Rental property income
  • Tax payments you’ve made for federal, state, and local tax

Move all your organized documents into an expanding file folder (Office Depot, $21.39) for quick access when you sit down to file your taxes.

Find Your Last Year’s Tax Return

Before you sit down to file your taxes, locate your federal and state tax returns from last year. Your return from last year is helpful for comparison to make sure you didn’t miss any important details. For example, you might have been eligible for a child care deduction last year that you also want to look into for this year. Scan through your returns before starting this year’s taxes and jot down some notes about credits and deductions to check for.

Decide If an Extension is Best

The government gives some grace when it comes to filing taxes. Now is an opportune time to decide if you should ask for an extension, which will give you an extra six months to file. The October 15th due date could be helpful for you if April 15th is approaching fast, but you need to locate a few documents or simply don’t have time in your schedule to file. Remember, you’ll still need to pay any taxes owed by April 15th, even if you do file an extension for filing.

File Your Taxes

Time to file! You’ve prepared for this all year, but here are a few more tips to keep your taxes as simple — and affordable — as possible.

File Your Taxes Yourself

Filing your own taxes doesn’t have to be scary. Sure, it might seem easier to bring all your paperwork to a professional to file. But that can also cost more money than filing on your own. And you might not even realize how simple filing can be when you use software like TurboTax. TurboTax is one of the most popular tax filing software, which makes sense since the program literally walks you through each step of your taxes, asking you questions along the way to get you the appropriate forms. It’s like having a personal tax preparer by your side. All you need to do is gather your organized documents, set aside some uninterrupted time to focus on your taxes and get them done with the help of TurboTax.

Save Money on Filing

If you have simple taxes and an adjusted gross income (AGI) under $72,000, you may qualify for one of several free e-file systems that partner with the IRS Free File system. These exist to help taxpayers save money when filing. Some programs even allow you to file your state taxes for free, too. If you’re not eligible for free e-filing, you can still save money on your taxes by using Savings.com. We have coupons and promotions for the most popular tax filing software in the industry. Find savings on tax products:

Save Copies of Your Taxes

Whether you file your taxes online or do it the old-fashioned way by mail, be sure to make copies of all your tax filing documents. You may need them for income verification for loans and other forms of credit, and they’ll come in handy again for next year’s tax season.

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