Tax Time Got You Feeling a Little Befuddled?

Tax time got you feeling a little befuddled? Are you ready for a change?

Financial and tax related documents always present organizational questions-sometimes nightmares. Since tax time isn’t that far off we thought it would be good to call a professional. This month’s ask an expert is Mary Kiser, CPA. We asked Mary if she had any tax related organizing tips we could share with our readers.

1. Mary suggests bringing an organized file to your tax preparer.

  • During the year, put all tax-related receipts/forms into an accordion file and sort by type/category: charitable contributions, property tax receipts, 1099’s, w-2’s, etc.
  • At year’s end, add up the receipts for each category before submitting to your tax preparer.
  • Don’t give your tax preparer a shoebox full of receipts. First, you don’t want to pay the preparer to total receipts, and secondly you want the preparer concentrating on ways to save your tax dollars.

2. Mary recommends keeping all documents for 7 years-tax returns, back-up receipts, etc. Other information such as settlement sheets for real estate purchases, brokerage statements that detail the purchase of securities that have not yet been sold and other “permanent” information has to be kept much longer-possibly forever.

3. If you own a business, Mary says to keep your records up-to-date throughout the year.

  • All balance sheet accounts should be reconciled. Cash accounts should be reconciled to monthly bank statements, fixed asset accounts need to match the depreciation schedule and credit card payable accounts should match year-end credit card statements.
  • You should use QuickBooks or other accounting systems during the year to keep track of how your business is doing.
    If your records are kept up-to-date you can make better plans during the year. This could include making decisions on purchasing equipment, planning for retirement and hiring personnel.
  • You should have QuickBooks reviewed by your tax professional prior to the end of the year so any adjustments/tax planning can be done.

4. Mary says to talk to your tax preparer during the year if you have any questions or have to make a major financial decision. The time to make a lot of tax related decisions is before the end of the current year.

As always, if you ever feel you need professional help with setting-up and/or maintaining bill paying systems, files or mail-don’t hesitate to call Absolutely Organized.

Jenny Power, Absolutely Organized, LLC