Nine Things To Make Next Year’s Taxes Easier

The following post is by MPFJ staff writer Travis, who blogs at Enemy of Debt where he candidly shares his family’s financial struggles, failures and successes. As a father and husband, he provides a unique perspective on balancing debt, finances, and family.

This year’s tax deadline has passed, and unless you’ve got some extenuating circumstances your taxes are filed and either a refund has been deposited in your account, or you’ve written a check out to the IRS. Each year I do exactly the same thing after completing my tax return as required by the government.

First I breath a sigh of relief, then I start getting ready for next year’s tax return.

There’s no time to waste. Here’s nine things that should be done immediately to help make filing next year’s tax return as stress free as possible.

Change Your Withholdings

The first thing to be done is to analyze the results of this year’s return. If you underpaid or overpaid your taxes during the year, you may want to consider changing your tax withholdings with your employer to prevent the same outcome.   Some people like getting a sizable tax return because it forces them to save money. That may seem like an interest free loan to the government, but it may actually be a great idea for people that have a hard time forcing themselves to save. The interest rate of a savings account these days is a fraction of a percent, so you’re not losing out on much interest accumulation. If you want a different outcome next year, change your withholdings now.

Label A Manilla Envelope

I keep all my important tax documents in a manilla envelope labeled with the tax year they pertain to.   Right after filing my taxes for the previous year, I get a new envelope and write the next year in big numbers on the front. I then make a checklist of everything I need to prepare my tax return such as W2s, 1099s, charitable contribution statements, property tax statements and more.

Print a Physical Copy Of This Year’s Return

A physical copy of my tax return (federal and state) along with all the worksheets is printed and placed in the current year’s manilla envelope. I have an electronic version stored on my computer, and backed up to a USB drive as well. But I like to have a physical copy printed out and filed with all my other tax documentation. Electronic data loss happens, and your tax returns would be invaluable if you were ever audited.

Find Your Property Tax Statement

How a county handles property taxes may differ across the country, but in my area we have our property tax payment coupons for the year already at this point. I don’t actually need them since my mortgage holder takes care of payment, so I put the entire statement in the manilla envelope. Otherwise, it may end up hiding at the bottom of some drawer, or even accidentally thrown away. I can then check that item off on the front of the envelope.

Copy Your Vehicle Registration Receipt

In some states part or all of the yearly vehicle registration fee is tax deductible. My family has two vehicles, one of which we’ve already paid this year’s registration fee. I make a copy of the receipt, since the original should be kept in the vehicle, and put the copy in the envelope. Another item checked off the list!

Get Ready For Medical Receipts

I label a normal mailing envelope with the words, “Medical Receipts,” and put that into the larger manilla envelope. Receipts for each medical expense incurred throughout the year will be put into the envelope for possible use while doing our taxes next year.

Business Documentation

I label another envelope with the word, “Business” Since I’m a freelance writer, I have business expenses during the year that may be tax deductible. I also will put a copy of my monthly invoices into the envelope. Having a place to store them all together ensures I don’t have to hunt for them when tax season rolls around at the beginning of next year.

Additional Items

The Manilla envelope will serve as your central repository for tax documentation. If anything happens during the year that may affect my taxes, the documentation goes in this envelope. For example, if I sell, buy, or refinance a home, or liquidate some investments, the documentation goes immediately into this envelope, and it gets listed on the front.

File It

Take the envelopes from both this year and next year and file them away in your filing cabinet, your fire-proof safe,or wherever you store your important documents. Put them to place so you know where they’re at when you need to find them again.

You may not feel like worrying about next year’s taxes now, but it’s the perfect time to start when the items needed are fresh in your memory. These activities will take very little time, and will get you started on the road to a successful tax filing next year.

Happy Tax Season 2016, now you’re ready!

How about you all? Do you have any other tips or tricks that you use to help make your next years taxes easier?

Share your experiences by commenting below!

***Photo courtesy Robert Cochrane at FreeDigitalPhotos.net