Don’t Let Tax Season Get You Down, Get Organized!

It is tax season again and with it comes an onslaught of paperwork and organizing. Don’t pay late fees this year; take these five steps to get your tax paperwork ready for your accountant, tax service or tax filing system.

1. Create a home for your tax documents and receipts. If you haven’t already designated a folder, a box or container for your 2010 documents, find something that can corral your papers. January 31st was the deadline for tax documents to be mailed so they will continue to come in from the past tax season.

2. Gathering all the papers from the last year can be overwhelming. Start working on one category at a time. First find or print your bank statements, then credit card statements and continue on through all of your needed paperwork. Next go through and highlight any purchases that qualify as a deduction for the past year and sort your receipts by category if they aren’t already. Take each day to tackle one tax related task.

3. If you have many medical deductions this year, there is usually a lot of paperwork that comes along with it. Match up your receipts and Explanation of Benefits (EOB) so you have a clear picture of your expenditures and deductions. Sometimes it helps to create a worksheet of your expenses to get a clear picture of the costs incurred.

4. If you are using a computerized money manager like QuickBooks, take the time to enter in all of your receipts and expenses so that it is up-to-date through December 2010. You don’t want to miss any deductions this year.

5. Give yourself a leg up on 2011 taxes now by designating a spot that will hold all of your tax documents for next year. Try labeling folders using the general categories: medical, donations and Taxes 2011 to capture everything else for the year. You can add any other categories that pertain to your tax picture. This initial sort will save you a lot of time next year.

Don’t let tax season hold you hostage this spring. Start now by getting organized for the current year and get set-up for success for next year. You will find that the tax season doesn’t have to be daunting and you will be less likely to miss any deductions that you are owed.