With so many forms to complete and numbers to keep track of, tax preparation can quickly become a stressful, time-consuming activity—testing the limits of your patience and taking time away from what’s really important.
But with some careful record-keeping and organization, you can take away some of that stress and make filing next year’s tax return just a little bit easier.
Here are a few tips for organizing your tax records after you file and being better prepared when 2020’s taxes are due.
1. Create a file for this year’s tax return
There’s nothing more frustrating during tax preparation time than searching through boxes to piece things together. And the more time you spend locating last year’s tax return—not to mention any W-2s, 1099s, and other schedules that go with it—the more stressful the process becomes, particularly as this year’s filing deadline inches closer every day.
As soon as you’ve filed your return, take time to create a single location for storing all physical forms, documents, schedules and other records pertaining to this year’s taxes—as well as a clear, visible label that makes finding that folder easy in the future.
This not only makes the process of filing your taxes a little faster when your taxes are due; it also makes it easier to locate last year’s records should the tax collector choose your return for an audit.
2. Store your records online
There’s little that hasn’t gone digital these days. So why should your tax preparation records be any different?
Saving past tax returns, W-2s and receipts on your computer can make it easy to access when your 2020 taxes are due. If you use a safe, secure cloud service, all tax documents you scan or upload onto your device are backed up automatically, ensuring these records never get lost and can be pulled anytime you need from one convenient location.
If you’re the type that likes to keep paperwork to a minimum, storing your tax records digitally can also be a great way to manage your tax bracket information while making clutter disappear.
3. Be a tax preparation pro by keeping your receipts
Itemizing your deductions can be a great way to reduce your tax burden when your 2020 taxes are due. And taking full advantage of itemized deductions means keeping all your receipts, documents that become extremely valuable during the tax preparation season.
Making a habit of keeping and storing every receipt—especially those related to large purchases like cars, house remodeling materials, etc.—can save you money on your next tax return while providing the tax collector the documentation they need to verify your deductions.
4. Start organizing now
It’s never too early to organize your tax records for the 2020 tax season. Being proactive in your tax preparation not only helps alleviate the stress of filing next year’s return, it also provides the opportunity to face the tax collector with confidence—and to minimize the potential for mistakes once the new year rolls around.
Creating a new file now to hold tax documents and receipts is a good place to start, while gathering information on any new credits or deductions you’re likely to claim next year can make it easier to complete related forms in the future. You can also begin to estimate the tax bracket you’re likely to fall within when taxes are due, as well as any steps you can take to mitigate your expected tax burden.
Visit your local Liberty Tax® office to learn your tax bracket and prepare for the 2020 tax season.