by Couch & Russell
You’re probably dreading doing taxes this year. Do yourself a favor… There is no better time to get organized for 2018 than while you are gathering your 2017 tax documents. Start by keeping money in your pocket—pre-tax deductions like 401K, IRA, and HSA contributions reduce taxable income for those that qualify. Review your eligibility and make a small increase to your 401K contribution at work or set up an automatic contribution to your IRA if you are eligible. Consult your tax professional during your upcoming tax appointment to see how much you might benefit from a small change.
Take the time now to set up a system to save and store your tax documents. It can be as simple as a physical folder, digital storage system or one of the thousands of apps that track income, spending, and tax categories. MyBlock works well for document storage and tracking. Carefully keeping track of all your deductions is the best way to lower your tax bill.
Start now. Think about last year’s return and the current year. What do you have every year? The most common forms mailed or accessed online in January/February are W2s, Forms 1099 (interest income, stocks, etc.), and Forms 1098 (student loan interest, mortgage interest, etc.) Save these to your file when you receive them. Many people who come to me for their tax appointments don’t even open the envelope– they just put it in the file and bring it in.
For those who itemize deductions using Schedule A, store your emailed receipts for charitable donations right away so they will be easily accessible come tax time. Churches will usually send out donation records at year end, but it never hurts to keep track yourself.
When donating items such household goods; make a list of the items given and store it in your file with the receipt for the donation. A simple list: “3 pair of jeans, 14 pairs of shoes, two end tables” will enable your tax preparer or software to calculate your donation deduction. Volunteer miles are often overlooked. Mile IQ, is a wonderful app to track mileage for both business and volunteer purposes.
Expenses for day care, summer day camps and after school care can lead to nice tax credits for those who qualify.
For those of you who own your own business, accurate record keeping is a necessity. We highly recommend that receipts are scanned and stored as back-up at least weekly, and that you use a software program such as Xero to track your income and expenses. Every receipt for expenses directly related to your business is like keeping money in your pocket at tax time.
At Couch & Russell, we believe no one should dread tax time. If you make tax planning and tracking a year-round habit, tax time can be a breeze—or at least less of a chore.
