Organizing Your Taxes

For many people, the most daunting part of having their annual income tax returns prepared is simply getting themselves organized.

 

 

At Reid, Sahm, Isaacs & Schmelzlen, LLP, we attempt to make this process easier on our clients by providing them with a tax organizer in early January.  The tax organizer simply reminds the client of the various tax forms that they will receive, and also provides a space for clients to provide other necessary information, such as how many business miles they drove during the year or what their total medical expenses were.

 

Just in case your CPA has not provided you with a tax organizer and you are feeling overwhelmed, here is some advice on how to organize your documents.  I would suggest creating 3 separate "piles".

1. Tax Documents

   Over the next month, you will be mailed a number of tax documents.  These include your W-2, and a number of documents that start with either the numbers "1098" or "1099".  It may also be a K-1 if you are a partner in a partnership or a shareholder in an S-Corporation.   To keep it simple, I would simply group these by type (all the W-2s together, etc.)  Your CPA will gather the necessary information from these forms directly, so unless there is something missing there is no need for you to do anything further with them.
   
   
2. Financial Statements
   

   If you own a business (as a sole proprietor) or rental property, you most likely are already keeping track of your income and expenses.  You may receive some tax documents, like a 1098 for the mortgage interest, but the most important numbers are located within your "books".  Just check these statements to make sure that they are accurate, and then provide them to your CPA.

    
3. Other Records
   

   In order to claim your deductions and credits, it is up to you to find the records proving that you are entitled to the deduction.  This means keeping track of your property tax statements, medical expenses, charitable contributions (you need to keep the acknowledgement letters you receive), and the amounts you spent as part of your job that you were not reimbursed for.  Don't forget to check your credit card statements because a lot of your deductions may be listed there for you.  This is the most challenging part of getting your documents ready for your CPA, but try to think of it as the most rewarding part because the receipts you find potentially mean the less taxes you will have to pay.

If you have any questions or need help preparing your 2013 income taxes, please do not hesitate to send me an e-mail.

 

As always, I appreciate all the feedback you leave in the comments section below.