Get in touch with me at 323-452-2680
The Life Transition Blog

Getting Organized for Tax Time


By the end of January most of you will be inundated with envelopes in the mail that scream “Important Tax Document” or the like.  Many of you will open them and review them as they arrive.  Still others will throw them in a shopping bag and avoid looking at them until April 14th.  A few of you will let them pile up on the kitchen counter, in the car, and on the washing machine and you may or may not be able to locate them all when it’s time to sit down to do your taxes.  There is a better way!

I suggest to my clients that each January they establish one place to throw any paper that MIGHT be helpful for preparing their income taxes.  This can be a bag, a basket, or a box.  The vessel doesn’t matter.  The important thing is that you are meticulous about getting every last item to that place.  Once the flow of tax related mail seems to have ended, by late February for most people, it’s time to sit down and organize the mess. Open everything and sort by the type of document.  For example, clip all of the 1099-INT documents together.  These are the forms that financial institutions have used to tell the IRS how much interest you were paid last year.  Repeat this for each document type.

Once you have sorted through everything it’s time to see if you are missing any.  The easiest way to do this is to start by pulling out the prior year’s tax return and looking for the schedules that show interest, dividends, mortgage interest paid, etc.  Match each entry on the prior year’s return to a document in your stash.  If you don’t have one, then it is time to figure out why not.  It may be that you closed an account and no longer receive interest from the institution.  Or maybe you refinanced your mortgage and have a different lender.   It is also helpful to look through statements for all accounts that you have currently open and make sure that you have documents for each of these if you had income, gains, or losses from them.  The idea is to cross check to see that you have what you need.

Many tax preparers will provide you with a tax guide or tax organizer.  Sometimes these are preprinted with your information from last year.  If you receive one of these, it is very important to take the time to review it , complete it especially as related to any changes in your family or situation, and make sure you have the documents you will need to support your return.

If this all seems overwhelming you might want to enlist the help of a daily money manager (DMM).   The cost will minor compared with the potential of forgetting significant deductions and your tax preparer will certainly thank you for coming to them so organized.
go back to all posts