There are few people who don’t find tax season to be stressful. You are not alone. In fact, the only people who are not at least slightly disturbed by it are those who either don’t have to file taxes (read too young, or too infirm), or those who let their spouse or parents take care of it for them. For everybody else, tax season is a pain, to say the least. Fortunately, making things go smoothly is not all that hard. It just takes a bit of preparation.
Go out prepared
Tax rules are always changing. This is true. But there are some fairly consistent things that you should be able to rely on from year to year. For instance, if you run a business you can write off a portion of your home expenses. The only thing that might change is how big a portion and what is included or excluded.
If you know that you will need to show evidence of expenditures, make it easy on yourself by going a step beyond the shoebox method. The dollar store is a great place to by a little receipt organizer. You can store them by type of expense, month in which it was incurred, and separate into definitely eligible, maybe eligible, not eligible but good to have for warranty/personal use.
Include a small pen with the organizer so that for entertainment and dining receipts you can make sure to write who you took out or for what purpose, as soon as you get it. It is so much easier to take care of those things as they come up rather than trying to remember a year later.
Arm yourself with information
The best way to make life easier at tax time is to be familiar with the rules. Now, obviously if you are reading this you are likely not a bookkeeper or an accountant. You don’t have to know all the rules intimately. But if you want to do yourself a favour, familiarize yourself with the general principles. Having an idea of what is and is not allowed will make life a lot easier!
Taking advantage of electronic tax filing tools is a tremendous time saver and offers the benefit of making fewer mistakes. Many of the software come with hints and analysis components to help maximize your refunds. However, they can also easily steer you in the wrong direction by offering misleading, and sometimes incorrect advice. If it doesn’t seem right or seems a bit too good to be true look it up on the government website. Chances are other people either have the same questions or have already found an answer that works for them.
Don’t wait to do it all at once
It took 12 months to collect all these receipts, invoices, packing slips, advertising. Set aside a few minutes each week to update a running document so that at month 12, at the 11th hour it is simply a question of taking what you already have and formatting it as your accountant or bookkeeper want to see it.
Oh, and one last thing: Perhaps you might consider meeting with a personal finance consultant so he can help you maximize what you already have and offer solutions you may not have considered yet.