One of the hardest parts of doing taxes yourself is simply gathering all of the information you need! If you have a side hustle, self-employment income, or are an investor, then you’ve probably got quite a few tax forms coming to you. And it can be hard to get organised! How To Get Organized For Taxes Using An Income
In preparation for the upcoming tax deadline, here’s how you can quickly get organised using an income tax binder: (This will save you a ton of time going forward!) How To Get Organized For Taxes Using An Income.
If you don’t even know where to start filing your taxes, check out our list of the best tax software!
Why Get Organised?
When it comes to filing your taxes, you need to take a lot of information and input it all at once – accurately. Where does this information come from? The information comes from various sources, which can complicate matters.
First, you’ll likely get tax documents throughout the year – with the bulk of them arriving in December, January, and February.
Second, you might have receipts and other forms that are separate from your tax forms. These could include copies of your property tax bill, auto registration, charitable donation receipts, and more. How To Get Organized For Taxes Using An Income.
Finally, you might have things related to your business or rental property you need to report. With all of these different things to deal with, being organised is key. An income tax binder is a great way to streamline doing your taxes (whether you DIY or use a professional). How To Get Organized For Taxes Using An Income.
Make Tabs for Basic Categories
Your first step will be getting your binder plus divider tabs and making sections for specific categories.
- Income (Including W-2 and 1099 Income)
- Investment Documents (Retirement account statements, dividend income, etc.)
- Rental Property Income and Expenses
- Mortgage Interest Statements
- Education Payments
- Personal Information For Everyone Who Belongs On Your Tax Return: How To Get Organised For Taxes Using An Income.
Make these tabs personalised for your specific situation.
Gather all of your documents and place them in the correct divider for easy access. When next year rolls around you can start filing documents as they come in.
Create a Section for Expenses
If you have any rental or self-employment income, then you’re going to want to meticulously track your expenses. Since receipts can be a pain to file in a binder a better option is to make copies of receipts, including several on the same page so that you can easily file and organise your expenses. You could also just include a plastic pocket divider for receipts if you don’t want to make copies. How To Get Organized For Taxes Using An Income.
I recommend keeping a copy of your current income tax return in your binder for easy access.
Start Preparing for Next Year
Being organized really is half the battle. Once you have all of your information together the tax prep software you use will walk you through everything else you need to do. Putting this system together doesn’t take very long but can save your hours of searching for certain tax documents. How To Get Organized For Taxes Using An Income. How To Get Organized For Taxes Using An Income.
Keep your system together and next year filing your taxes will be a breeze!
Key Takeaways
Here’s the key steps to get organized and file your taxes:
- Setup a binder with basic tabs for each information section
- As you receive documents throughout the year, file appropriately
- Create a cover sheet to list important tax return items
- In tax season, use the binder to keep organized for easy filing
- After you file, put all the documents with your tax return in a file, empty the binder, and be ready for next year! How To Get Organized For Taxes Using An Income.