It’s that time of the year again: tax season. While the fateful day can be cause for fits of anxiety and stress, I’ve learned that being organized helps to make April 15th less “Week of Total Chaos” and more “Week of Mild Annoyance.”
So, how can you, my dear Ambitionista, no longer be at the mercy of a few pages of paper?
I thought you’d never ask.
1. Know Your Tax Status
Life happens. Did you get married this year? (Or, divorced?) Kids enter the picture? Dad move in to live with the family? Did all this happen this year? These might be situations that affect your tax status and make you eligible for more than one. Before you file your return, think about the past life events and any exemptions you may have.
2. Designate a place to keep your documents.
Half the battle of tax season is sifting through all the messy paperwork. So, gather all your receipts, expense forms, sources of income (1098, W-2 or 1099 forms), deductions such as receipts, property tax documents, etc. and records of any investments.
Having one place for all these important documents will save you time and that migraine that seems to hit as April looms closer.
I recommend these apps to help you with organizing:
Expensify: a quick solution to capturing cash expenses, mileage, reimbursements, etc. and importing all card transactions.
Shoeboxed: a ridiculously simple way receipts and create expense reports
IDonatedIt: an app that keeps track of non-cash donations
3. DIY or Hire a Professional?
Are you going to be filing your own taxes this year? If so, it’s especially important to be aware of changing tax laws and to double check information you include — putting in the wrong social security number can delay the process and even cause you to file your papers late.
If you’ll be hiring a tax professional to do your papers, make sure you contact them at least a month ahead of the deadline. Tax season is huge for them and they get swamped with people who wait until the last minute. So don’t try to call an accountant three days before the 15th — chances are they’ll tell you to get in line. How to get a good tax accountant? Look for someone who seems like she’s got her s**t together < cough cough> and ask for a recommendation. You can go on Yelp (no seriously) or Google and look up 3-4 potential candidates. The best tax accountant is someone who has experience working with people in your profession. So, if you own a restaurant, for example, look for an accountant with a lot of restaurateur clients. Mainly because they can give you all kinds of advice on how to manage your finances based on similar experience.
FYI: While trying to file your own taxes may save you money upfront, a tax professional who does this for a living might save you a lot more money in the long run. If you’re a small business, a contractor or own several properties, you’ll be spending a lot of time sweating the small stuff. A pro, however, gets paid to do these tedious tasks and can help you pay less in taxes or maximize deductions.
4. You Waited Until the Last Minute. Don’t Panic.
When filing online, the return won’t be considered on time until the IRS formally accepts it for processing. So, make sure you file at least two days before the deadline. If you’re going the snail mail route, there’s a list of IRS-designated private delivery services to meet the “timely mailing as timely filing/paying” rule for tax returns and payments. These include:
Federal Express (FedEx):
FedEx Priority Overnight, FedEx Standard Overnight, FedEx 2Day, FedEx International Priority, and FedEx International First.
United Parcel Service (UPS):
UPS Next Day Air, UPS Next Day Air Saver, UPS 2nd Day Air, UPS 2nd Day Air A.M., UPS Worldwide Express Plus, and UPS Worldwide Express.
For tax returns to be considered on time, the papers must be postmarked by April 15, 2015. If it comes down to the day-of and there’s no possible way you can get your returns in on time, then file for an extension. The penalty for not filing or getting an extension by the deadline is harsh — 5 percent to a max 25 percent per month of the amount due on the late return.
We’d love to hear your own tips for making tax season easier. Let us know in the comments!