We’ve all done it before—the frenzied hunt through all of our drawers and folders in search of certain financial documents for tax filing. Even when you are lucky enough to procure one of those documents, being greeted by tears, holes, and misplaced attachments is not an uncommon occurrence.
April 18th is just around the corner. The time leading up to Tax Day can be hectic, but there are always ways to mitigate the stress associated with taxes. Whether you’re ahead of the game and have already filed, or you’re still in the midst of sorting through financial documents, integrating some organizational tips is key to saving you hours. Here are three pro tips to make your life less complicated.
Regardless of whether you take the standard deduction or itemize, organization can go a long way. Designate a certain location to collect and save your receipts and financial documents. While the easy choice might be just to toss it all inside a drawer, filing in an orderly manner is the best way to go. The vast majority of our expenditures are on small purchases, but you’d be surprised at how much those all add up. Getting a holistic understanding of the amount you’ve spent throughout the year is only attainable at the end of the financial year after sifting through those receipts. Consider compiling all of the expenses on a monthly basis when paying your bills—this will surely relieve some of that stress of a year’s worth of financial documents.
If placing each individual receipt within a physical file is a bit too outdated or time-consuming for you, there is an alternative. Many companies offer online services that allow for the simple management of your receipts. Some services will even allow you to send your documents virtually and they will upload them into a personalized database. Other services include a record of your transactions through photos taken on your smartphone. There is even the possibility of having your receipts directly sent to these finance apps for them to immediately combine with your yearly report. Personal finance tools are the best solution for those seeking a convenient platform to track and categorize your spending. Come tax time, a single report of the year’s expenses, accessible through your phone, is all you will need to file your taxes.
Electing a standard deduction or itemizing your expenses is a decision all filers needs to make. For 2016, the standard deduction for single taxpayers is $6,300 and the deduction for those who are married and filing jointly is $12,600. If you decide upon standard deduction, retaining your receipts is not necessary for the purposes of tax preparation. If you are confident that your deductions are greater than the standard deduction, itemization would be the option to pursue. While you may be entitled to a larger tax deduction, the responsibility of providing these financial documents and proving your case is entirely on you. This is where maintaining all of your receipts and financial papers is necessary.