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6 Easy Organization Tips to Take Time off of Taxes

Sep 3, 2023 | Budget

Four adults walk and ride bicycles along a picturesque beach. Text on the left reads, "6 Easy Organization Tips to Take Time off of Taxes." The logo at the bottom reads, "Stewardship Trust Advisors.

As the saying goes, two things are inevitable: death and taxes, and, out of those two sure things, you can only really plan for your taxes. It should be no surprise when tax season surely and steadily rolls around again, yet every year there are plenty of individuals who file for a tax extension. Whether you’re one of the 36.8 percent of Americans who hire someone to file taxes for you or 34.5 percent who use a digital tax filing tool (like TurboTax), you’re going to need to have the correct numbers and forms in order. Every little time saver helps when it takes the average individual more than 21 hours to assemble and fill out their annual tax return. Forget rushing, stressing, and floundering to get taxes filed by Tax Day with these 6 easy organization tips to take time off of taxes.

6 Easy Organization Tips to Take Time off of Taxes

Put important tax dates on the calendar

April 15 is emblazoned in our minds like our mother’s birthday or our anniversary, but there are other dates during tax season to remember. For example, any 1098, 1099, or W-2s are supposed to be mailed by January 31. (Also, it doesn’t hurt to check what day of the week April 15 falls on. If it falls on a weekend or holiday Tax Day will be the following business day.) When marking your calendar check the dates for the upcoming tax season of the last days to fully fund your retirement accounts (traditional and Roth IRAs). Other accounts, like a Keogh or SEP, have a separate filing extension date, so check those dates too. (A simple Google search should suffice.) If you did apply for and receive a tax filing extension be certain to set an alarm at least a month out from the October date.

Create a filing system

It doesn’t matter what sort of filing system you use, just that you use something that works for you—folders, sticky notes, or digital files. Whatever you choose, stick with it and be vigilant about grouping your receipts, files, and important paperwork. If you do choose to go all paperless you’ll want to keep a physical paper trail as well as insurance in case of an audit.

Learn your deductions

At 74,608 pages, the federal tax code is not interesting, or engaging reading. Depending on your job(s), certain sections of the tax code and the corresponding deductions are going to be of greater interest to you than others. Claiming deductions benefits your bottom line by reducing your taxable income, resulting in less taxes owed to the federal government. Consult with a certified tax planner (a type of financial advisor), and do your own research to find out what you can and should be claiming on your taxes. (An online guide like Tax Receipts is a good place to start.)

Keep the receipts

Once you know what you can deduct, then you can properly keep the receipts needed to claim those deductions. File them within the system you created and consider scanning them into a digital folder in case they would get damaged, lost, or faded. Itemize, or categorize them, into the tax areas you know you may claim such as “Donations,” “Office Supplies,” and “Travel.”

Reduce clutter

One of the greatest inhibitors to organization is clutter. In the case of your taxes that clutter is going to be all the forms, documents, and receipts that you no longer need but are still hanging onto. The end of the tax year, or after you file, is a good time to take stock of what you need to keep for future years versus what’s superfluous. If you’re someone who keeps your pay stubs from each pay period, use them to double-check the total on your W-2 and then shred them.

With your online bank account, there’s no need to keep monthly paper statements past the end of the tax year unless a critical financial event occurs and you think you may need paper (or a scanned copy) for reference. (You’ll want to hang on to voided checks just in case.) The same advice (electronic versions over paper if possible) goes for investment statements and loan interest statements. As for those pesky paper receipts, once you have filed and scanned the receipts, these are good to be shredded.

Consider cashing out

Undoubtedly, cash is easy to use if you have it on hand, but if you’re buying something that may be part of your deductions, it’s a best practice to use a debit or credit card for easier tracking of the expenditure in case of an audit.

Taxes Are Just One Part of a Solid Financial Plan

These organization tips to take time off of taxes will help with one part of your financial plan. But having a comprehensive plan for your finances is key to having peace of mind for the future. Schedule a consultation with Stewardship Trust Advisors today.

These weekly articles which are produced and distributed by Pilgrims Capital Advisors, Inc. contain information on topics about investing, tax planning, estate planning, asset allocation, insurance, and many other financial subjects. Please note that they are very general and must be applied to your circumstances through the services of a trained or licensed professional who specializes in these areas. If you have questions or needs related to the subject matter of this article please contact us by clicking on the link below and we will point you in the right direction.

Pilgrims Capital Advisors, Inc. is a Registered Investment Advisory Firm located in the state of Michigan.

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