3 Ways to Take the Pain Out of Tax Preparation
July 15, 2020… That’s the new deadline for submitting your 2019 US tax returns. On March 21, 2020, the IRS issued a notice that they were extending the usual tax filing and payment deadline from April 15 to July 15 due to the COVID-19 pandemic. This new date provides taxpayers who owe money a little more time to come up with the necessary funds. It also helps reduce the stress for families who were directly or indirectly affected by the pandemic.
So, if you haven’t filed your taxes yet, there’s good news – you still have time to file! And we have three tips that can help you reduce the pain of tax preparation, either for this year… or in the future.
Keep Necessary Receipts
The law states that you must maintain tax records for three years after you file your return, including all receipts for any deductible expenses you have claimed. And it is very easy to forget to save a receipt for your taxes when you are always on the go! But no matter what the deductible expense is – whether you are donating to a local charity, buying office supplies for your small business, spending from your Health Savings Account (HSA), or even trying to keep track of your expenses for a rental property you own, you are required to save the receipt. For families, keeping track of receipts can be especially tricky, because it’s not just your expenses come tax-time… but your spouse’s as well.
TIP: Use an app or implement a system for you (and your family) to use whenever you have a deductible expense. Be sure the app or system allows you to easily save a copy of the receipt, the date, and a description of the expense.
Gather Your W-2s, 1099s, and Other Forms
By the time you add up all the tax-related documentation you are required to save, you will most likely have dozens of tax documents (especially in homes that have two working adults). Add in your federal and state tax return, and you are looking at quite a few papers you need to track! Remember, you will need to provide the IRS all your receipts and tax-related paperwork if you ever get audited!
TIP: Save copies of your tax returns with your supporting paperwork to a secure cloud-based storage solution or app vs. your computer. This way you never have to worry about misplacing your important paperwork or even a fire destroying your documentation (or the computer it’s stored on). And, yes, the IRS is perfectly okay with digital copies!
Save Copies of Your Returns
When tax time comes, you will probably receive a lot of forms in the mail. Your employer (or employers) will send you W-2s or 1099s. Your bank will send you a 1099-INT for any qualified accounts. Your brokerage firm will send you a 1099-B, and charities will send you tax receipts for any contributions you made throughout the year. Keeping track of all these forms can be daunting, but if you make it a habit to keep all these documents in one place, it can help reduce the stress of tax time.
TIP: Make it a rule that every time someone in your family receives a tax-related form that they place it in a designated folder in your house.
Tax time can be a stressful time for all families, but by implementing our tips listed above, you can reduce some of the pain associated with taxes. And if you utilize an app to save and organize your tax-related receipts and forms, you will be even more prepared!
With Sortifyd, tax preparation becomes even easier. Both you (and any other adults in your home) can easily save and share receipts, tax documents, etc. to a centralized location that is accessible on all your mobile devices when it is time to work on your taxes! Simply click, tag, and save your important papers/receipts as you receive them and have peace of mind knowing that your documents and information are always encrypted and saved and there when you need them.
On April 28, 2021, the NineBx app was rebranded as Sortifyd. This blog post was created before the rebranding and may contain screenshots and/or content that refer to our previous branding.
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