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Yes, you can organize your tax documents!
Do you struggle to get all your tax forms together to give to your accountant to prepare your taxes? I have worked with some clients that are extremely organized and some that are not. My advice to everyone looking to save some time and money with tax preparation is simple: organize your tax documents based on last year’s return and use it as a guideline for this year.
1. Go through last year’s return line by line
First, get a copy of your previous year’s tax return and look through it line by line. Most people have similar tax forms from year to year. So, use your previous year’s tax return as a guide or checklist to make sure you have everything you need. Keep in mind that if you switched jobs, made new investments, bought a house, etc. you may need some new tax forms. Luckily, those items should be fresh in your mind.
2. Contact people who owe you tax forms
Secondly, for any tax forms that you do not have from the previous year and you need for this year, get in touch with the business/person so you can get them for your accountant.
3. Keep a copy of everything
Thirdly, once your accountant completes your taxes and sends you back your information, keep everything for next year. This way, it will be easier to remember what you need when you take out the same checklist next year. These simple steps will not only help you organize your tax documents but could also save you money on your tax preparation fees.
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How to get your taxes organized
In my experience, clients that are very disorganized with their tax information always end up paying more for tax preparation. This is mainly because CPA’s bill for their time, and if you hand them a huge mess, they will spend more time organizing it than actually getting real work done. So, if you would like to save some money, I highly recommend following some simple proactive steps to organize your tax documents.
Find and go through last year’s tax return
The first step is to start with going through your last year’s tax return, which should be stored in a safe place with easy access. Additionally, you should have a file with all of last year’s tax forms. But, if you do not, follow these simple steps and you will be set for next year. If you do not have your tax return from last year, call your accountant or go onto TurboTax or Tax Act and get it. Basically, you need to go to whoever prepared your return last year and get a copy from them. In a worst-case scenario, you can go online to the IRS website and request an online transcript of the last tax return you filed.
From here, go to page one and go through the return line by line. Use it as a checklist for this year’s tax information. For example, if you had wage income last year, then make sure you have a W-2 for this year. Also, make a note of any tax information that you are missing, which will be addressed in the next step. It is important to remember that anything new for the current year will have to be included as well. This could be a new W-2 or 1099 from a new job but these types of events should be fresh in your mind.
Contact everyone who owes you tax forms
Once you know what forms you are missing, this is a pretty easy step to complete. As you went through your checklist, you made notes for any missing forms. Now you will need to go through this list and contact everyone who owes you tax forms. This could be as simple as logging into your healthcare provider and printing out your 1095. Or, it could be as difficult as going to a previous employer and trying to find someone to get you the 1099 you need for your taxes. Either way, it is important to make sure you have all the forms you need for your entire tax return.
After you have everything you need, it is time to put all the information together to give to your accountant. If your accountant doesn’t come back to you asking for additional information, you did a great job and have given him or her everything needed to complete your return. If they come back to you asking for more information then you should take note of what you missed for next year.
Put everything in a safe place for next year
After you get the information back from your accountant, make sure you get a copy of your tax return for your records. Also, you need to put all your tax information in a safe and easily accessible place. While this may seem like the easiest step in this entire process, it is by far the most important. Computers can crash, files get deleted, papers get thrown away, etc. For this reason, you need to take caution with this step, and make sure you put the paperwork in a place you will remember next year! When you start this process next year, you will be grateful to yourself as this process will be significantly easier and will save yourself time.
The final step is to store everything in a safe place for next year.
Final thoughts on organizing your taxes
The entire point of this process is to save time. This process will reduce the amount of time your accountant takes preparing your return, it will save the back and forth conversations with your accountant, all of which will save you money! Also, once this process gets rolling, it will save you time as well. This is a very simple process, and once you put the plan in place for a few years, it will become like clockwork. You will look back and not understand how you could prepare for tax season any other way!
Find your most recently filed tax returns
If you do not have a physical or electronic copy of your most recently filed tax returns, then contact your tax preparer from last year.
Review your tax returns
Go down each page of your tax return from last year, line by line, and make note of every tax form you have for this year and every tax form that is missing.
Contact the business/person for any missing tax forms
Whatever forms you determine that you will need to complete your return for this year, go online and find the contact information of a person to get this information. If you are unsure how to do this, consult with your accountant.
Put everything in a safe place
Once you get your information back from your accountant, put the tax forms and return in a safe place that you will remember for next year.
About the Author
Adam Goldstein, CPA/ABV
Adam is a Certified Public Accountant (CPA) and Accredited in Business Valuation (ABV) with over 9 years of experience in taxation and business valuation. His experience ranges from preparing standard individual returns and complex high-net-worth returns to small business returns. He has worked in public accounting and private equity, but currently operates a personal tax practice serving various clients across the entire United States, as well as a handful of international clients.