Spend 5 minutes today!
Imagine a less stressful tax filing experience. I can't say stress-free, because even I believe that is a myth. But what would you trade to make your tax filing experience less stressful? Would you spend 5 minutes today, an hour tomorrow ...to reduce the stress from taxes next year?
Much of the stress with taxes comes with not having all your numbers and documents ready, and of course not knowing how much you will owe.
Here are 5 tips to reduce the stress from the 2022 tax season:
1. Give it a home
Take a manila folder or document folder and write on it "2022 TAX DOCS". To make it easy on yourself, keep this physical folder near your incoming mail.
Create a digital folder in Google Drive or Dropbox and title it “2022 Tax Docs”.
When you receive your W2s, 1099s, 1098s, etc., scan and file them to both your digital and physical folder as they arrive.
Note that some of these tax forms are now only distributed electronically. Remember to login to your accounts, download them and save them to your folders.
2. Give it a date
Book your tax appointment with your tax preparer in advance to review your tax return during filing season.
Having a date on your calendar provides you with a deadline and, frankly, some of us need that sense of urgency to get everything ready in time.
Set a reminder 2 weeks, 4 weeks from the calendar date. Don’t let it slip by, it is too easy to procrastinate.
Depending on your tax preparer, they likely have a cutoff date that they need documents submitted by in order to file your return on time. Adjust your reminder to account for both your filing deadline and the deadline of your tax preparer.
3. Make it secure
Most tax preparers use secure client portals for document exchange. Use their secure portal for uploading documents. DO NOT send sensitive information over email.
Same goes for where you store your copies of prior year tax returns. If you have these saved on a shared drive, double-check that access is limited.
4. Use software to get organized
Both software and apps exist to help you track practically everything these days. Consider how much time you spend chasing down numbers vs shelling out a monthly $5 fee to track it for you. And in some cases, the software is free!
If you don’t have a business and are just organizing your personal accounts, we recommend software like Intuit’s Mint that links to your credit cards and bank statements to auto-categorize your spending. By the way, this is FREE!
If you have a business, various bookkeeping software packages are available. We recommend QuickBooks Online, Xero or WaveApps. The first two are more dynamic, but the latter is free if you have simple tracking and reporting needs.
Need to track your mileage? MileIQ is our favorite.
What about receipts? If you have QuickBooks Online or Xero, they have receipt tracking in their apps. If not, the apps are endless from Receipt Jar, Receipt Hog, Receipt Pal…the list goes on.
4. Get a picture of what is coming
One of the biggest mistakes we see is waiting until it’s time to file taxes to ask for ways in which to save on taxes.
Tax strategy does not happen at tax filing.
Most tax-saving strategies need to be implemented in the calendar year. We file taxes after that calendar year has ended, as does many of the strategies that “could” have been implemented.
Tax preparers love to help clients with mid-year and end-of-year reviews. Reach out and run your numbers to see what is coming and see if any strategies can be implemented before year-end to optimize your tax savings. This will definitely help to reduce the stress from taxes.
5. Get caught up on business bookkeeping
If you have a business, get your business books up-to-date now. This can take 5 minutes a week OR hours depending how far behind you are.
The more you put this off, the larger the pile compounds and grows. Don't let it grow!
If you need help, hire a bookkeeper. If you don’t know how much you are or aren’t making, it is very difficult to make profit-driven decisions. If it’s not in your wheelhouse or you simply don’t have time, outsource it. This is another huge stress reliever.
Overall, the most stress we encounter among clients is due to not being organized. Even if you only implement tip #1 above, it will give your documents a home and get you organized as tax documents and mail arrive.
Utilize apps and software to help you organize your numbers. Developers have created these tools to solve problems and create solutions for others just like you.
Spend 5 minutes today to reduce the stress from taxes and save hours in tax time! Sit back and let your tax preparer go to work for you!
Julie R Merrill, CPA
JULIE R MERRILL CPA & ASSOCIATES
16776 Bernardo Center Drive, Suite 203, San Diego, CA 92128
Julie Merrill is a Certified Public Accountant, business and tax strategist and has over 25 years of experience working in large to small companies. She currently owns and runs her own tax practice, Julie R Merrill CPA & Associates in Rancho Bernardo.