Plan Now to Make Tax Time Easier
/As we say goodbye to 2020 (thank goodness!), a bit of preparation now for this year’s tax return will pay off when it comes time to file. Here are a few suggestions that may be helpful:
• Develop a system that works for you. For example, create either labeled folders or an electronic folder for scanned documents. Your system should keep all important information together and be easy to access so you will be more likely to use it. If you plan to use scanned documents, have a temporary home for paper documents prior to scanning.
• …And use it. Tax forms usually start arriving by mail or are available online in January. As documents come in the door, put them in the designated spot so they do not get lost on the kitchen counter or in your email inbox. Also, review forms carefully, and if any information is inaccurate, contact the issuer ASAP for a correction.
• Review your prior year return. Chances are good that the information you needed for your return last year, will be needed this year too. Make a checklist of what you will need and who to contact to get it, if necessary (such as daycare receipts). Bonus points if you check things o as they come in the door!
• Identify new items. Remember to also gather information for new items that may be relevant at tax time, such as inherited financial assets (IRA accounts, etc.), or if you started a side gig during the year. Or, if you disposed of assets (such as a house), you will need information on the sale to figure gains or losses.
- Pam Smitson, CPA, CGMA, Smitson Erhart-Graves Financial Advisors
