How many eggs made it to your basket?
Have you ever watched a group of kids racing around to find Easter eggs? Each one rushes to find the next egg and stuff it in their basket. The basket is overflowing, and they don’t even know which eggs they have, but they keep running around to collect more. A lot of adults look like that at tax time! They gather up their receipts and online charges and try to stuff their files with the right information at the last minute. It works fine for collecting Easter eggs but not so well for filing taxes.
Have you ever filed an extension because you couldn’t get organized in time to file your taxes by the April deadline?
There is a better way.
- A proper filing system to organize paper receipts
The old saying: “A place for everything and everything in its place” applies to filing your taxes. When you have a filing system already set-up you can easily file papers properly as you go. You need a digital filing system as well. This helps when you make purchases online and lose track of the receipts because they were sent as a PDF or email. Those receipts must also be filed in an organized and findable manner, on your computer. The key is to have the filing systems set-up already, so you can file receipts as you make purchases throughout the year. Be sure your computer gets backed up daily or weekly in case you need to retrieve receipts after a hardware problem.
- A financial tracking software program to help with deductions and to categorize expenditures
There are different software programs available depending on your financial goals. Some are for debt reduction and some are more for tracking items. Like a good filing system, a financial software tracking program eliminates the scramble at tax time.
- Stick to it.
Sticking with your new filing system or using a financial software tracker consistently may be tough at first but stick with it. Making regular appointments (weekly, monthly, and quarterly) with yourself to organize and file tax papers can make the task easier. You may find you need an accountability partner to work alongside you as go. (A trusted advisor who will be there to answer questions along the way and help you get started with a system you can stick with.)
As you apply these tips, think of little kids gathering up Easter eggs and congratulate yourself for gathering your eggs as you go. It’s much easier to file taxes if you keep your eggs in an organized basket!