Take the stress out of tax time: plan now for next year

Take the stress out of tax time: plan now for next year

This year, federal and state income taxes are due on April 17, but two extra days beyond the usual April 15 deadline probably won’t make much difference if you haven’t started getting organized by now. Every year, millions of people (and businesses) wait until the eleventh hour to get their records in order to send to their accountant or to sit down in front of the computer to file taxes on their own. If you’re reading this in a state of semi-panic because you’re among these millions, as soon as you mail or hit “send” on your returns for last year, put a plan in place to make next year less stressful. Here’s how.

File last year’s taxes away. Once your returns are complete, box up and store all of your tax records from last year to make room for this year’s paperwork. Ask your accountant how long to keep prior year records. Seven years is a rule of thumb, but there are exceptions, and some tax professionals recommend keeping old records for much longer.

Put your filing system in order. Keeping all of your income and expense paperwork organized throughout the year will, quite obviously, make your life easier as you get ready to prepare for tax time. If your system needs a makeover, ask practice mangers at other offices what methods and tools they use to keep everything in order. Staying more organized may be as simple as highlighting dates on documents before your file them, using color-coded folders, or purchasing an additional file cabinet for storage.

Upgrade accounting software. Have you been limping along with an old version of QuickBooks® or another software program for a few years too many at this point? Go ahead and invest in the tools you need to make your job easier. You’ll be glad you did, and the cost of the upgrade is tax-deductible.

Enter data as it becomes available. If you’re anxiously eying a big stack of bank deposit records and receipts that need to be entered into your system (although this is less of an issue than is used to be since accounting software has become more efficient), this may be an indicator that you need to develop a routine of inputting data in a more timely manner.

Make an appointment with your accountant. CPAs and other tax professionals often disappear for vacation in late April, but as soon as it’s reasonably possible, schedule an appointment with your accountant to see what advice he or she has about making the process easier for next year. Choose a date now for when you’ll commit to having records to your accountant in early in the new year for tax preparation.

Tax time may never be pleasant, but by staying organized throughout the year, you can create a situation in which you’re not scrambling around at the last minute to meet filing deadlines.