Guess what? I’m not an expert on banking, taxes, or law. So, don’t take this as any kind of official advice, ‘k? Thanks!
Paying taxes is such a fun topic. And figuring out how much you owe is a super fun way to spend a Saturday. And I’ll stop with the sarcasm now.
After being married more than 20 years, I’ve developed a system for keeping up with taxes through trial and error.
As in, much trial and even more error.
Early on, I pretty much threw everything in the proverbial (actually, literal) shoe box. And hoped for the best. And procrastinated. Until nigh onto Spring, as the April 15 deadline approached.
And then I spent countless frantic hours trying to sort everything out and locate exactly the documents I needed.
Because when I say I threw everything in, I mean every grocery store and gas receipt, every warranty we got… pretty much everything that came in the mail that year was thrown together into one big pile. Not a pretty sight.
And every year I swore that I’d never do THAT again.
I wish I had a profound story about the year that everything changed.
Unfortunately, I don’t. I’m afraid it just evolved…that, or I just don’t remember what it was that made a profound difference in my life. Highly possible.
I do know that I’ve read lots of books over the years about being organized in general…these three are at the top of my list and still on my shelf today….Organizing from the Inside Out, Smart Organizing, and Survival for Busy Women (*affiliate links).
That said, here’s my process now…I try to keep it as simple as possible.
I have two physical folders: one for pay stubs and one with a fancy and creative title, “[current year] Taxes.”
I also keep an Excel spreadsheet with five pages.
First is the main one with summaries of everything (property tax totals, professional membership fees, relevant insurance premiums, and totals of the itemized areas). I also note anything out of the ordinary for the current year, such as HK’s driving school expense last year.
The other pages are for these itemized categories: charitable contributions, medical expenses, teaching expenses, and blog expenses (this one’s new this year!). 🙂 I am not an Excel expert, but I love how you can get it to sort by different fields. This makes it easy to make sure that what I’ve entered for our church, for instance, reconciles with the year-end letter they send to us.
OK, the nitty-gritty.
Ideally, I would enter these items on Excel as they are spent…and for two whole months out of the year {you guessed it: June and July} I do.
But the rest of the year, that’s where the physical folders come in so handy. When life is in overdrive (AKA the other ten months), I am doing well to throw things in the folder….some years I don’t touch Excel again until March, when I’m ready to put everything together.
So, what goes in the physical folders?
- Doctor bills/pharmacy receipts
- Tax forms such as the mortgage interest statement, W-2’s, etc.
- Receipts for itemized deductions
- Credit card statements if I know there’s a charge that matches a deduction, or if I haven’t had time to check it yet
- Filled checkbook registers
And that’s all I put in. No more mountain of mail.
The physical folders are there so that when I’m ready to look at it, I’m not searching high and low. Which I’ve done many, many times.
The credit card statements are also available online, but I’m old school, I guess. I like to have the physical copy. I think I can access the info faster this way as well.
This is the most exciting post ever. Oh, sorry, more sarcasm.
One last thing I’ve added in the past year….
A little section on Excel where I check off whether I’ve reviewed the credit card statement for each month of the year. This got added after I realized I was checking and re-checking statements because I wasn’t keeping up with this!
Once everything’s filed with fed and state, I print out the spreadsheets, move everything out of the physical folders, and stuff it in a large envelope for safe keeping for the next seven years.
And that’s it. Simple enough that this year it took an afternoon, not days, to be sure I had everything entered in and totaled just right.
What about you? Comment below with what you do to make tax season easier!