Tax Time: Tips to Make it Easy

It might seem strange to write about tax time right after it passes. Once taxes are filed and settled, most people push them out of their head until April of the following year. Who could blame them? However, now is the prime time to think about them for next year.

Put simply, while all the challenges and frustrations are still fresh in one’s mind, it’s the best time to be proactive about next year’s filings. While I don’t enjoy preparing my taxes to file in two countries, I’ve learned a few tricks. After going through some rather complicated adjustments, and a month-long stomach ache from the stress a few years ago, I devised a two-part system. My system eliminates delays and stress from searching for what you need.

Step 1: Identify what you need to prepare your taxes.

For some, this may be straightforward and involve only a few documents. For others, such as sole proprietors or Americans living over seas, a bit more may be required. Every year, for example, I need to fill out an FBAR (Report of Foreign Bank and Financial Accounts) for my US taxes. Basically I have to report the maximum balance for each bank account. It’s not hard, but it’s really, really tedious. And I know I need all my bank statements for my tax prep. If you have extra documents like this, create a checklist. Eliminate the guesswork and know what you need for next year.

Step 2: Designate a place to save the documents you need.

This works for paper and electronic records. When I had my own business, I set up a box with a pen and small stapler to collect paper receipts. That way I could label and staple receipts when I dumped them in.

For electronic records, I designate dumping areas. In every email account I have a folder (or label) called “Taxes.” Throughout the year I move anything tax-related to this folder. Or label it as “Taxes” for easy searching later. When I sit down to prepare my taxes, I can find everything I need, even if it takes me time to download. I also maintain a Tax folder on my laptop by year so I can file as I receive documents.

My two-part strategy won’t eliminate all the bad feelings associated with taxes, but it does make the process of filing easier and less stressful.

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