Need a few financial tips to assist with your money and tax decisions? As a CPA, I get a lot of questions on how best to prepare for paying taxes, and preparing for tax season. Today, I would like to give you a few suggestions for this year and steps to be sure you will be ready next year!
A lot of people wait until the last minute to start adding up receipts. What I suggest is to purchase a money management tool, like Quicken or QuickBooks to track your money and expenses on a weekly or monthly basis, so that you are not playing “catch-up” at the end of the year.
OR: For those of you that don’t like to manage receipts digitally, I recommend purchasing several large manila envelopes and labeling them for the different expenses you will incur over the year. For example, you might have ten big yellow envelopes and one might be labeled automobile expenses, one might be repair and maintenance expenses, and one could be labeled cell phone and communications, etc. Each month you would just throw the receipts for that category into the envelope.
A lot of people make the mistake of filing or presenting their receipts by month: January, February, March, and so on. The government doesn’t care about monthly receipts, only what the sum of each category is – as related to your income and deductible expenses. So filing receipts by category is much more efficient. Another thing you might do is to save all receipts when making a charitable donation. Place these receipts in an envelope as well, to document your tax deductions.
Additionally, if you have several streams of revenue, be sure to save several of your pay stubs, in the event you don’t get a W-2 from that employer. At the least, save the final pay stub of the year to give yourself a “snapshot” for determining your annual salary from that employer or company.
Hopefully you will find these tips helpful. These simple steps will result in you being better organized, while making tax season less stressful and easier to deal with!
You CAN have a healthier relationship with your money!