How to Get Your Shit Together for Tax Season

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By Brittany Turner, Founder of Countless LLC

Everyone can get crazy overwhelmed once tax season hits. Do you need to hire a professional? Do you have the documents you need? Do you even know what documents you need? There can be a lot to think about.

Below are some tips to help make the process a bit more painless. They’ll also help you prepare in advance for next tax season so you don’t wake up in a cold sweat in the middle of the night. But don’t fret… you still have time to get your shit together!

Obtaining and Storing Tax Documents

First things first. Half the battle of doing your taxes is literally just making sure you have everything you need! The first step of filing the return is making sure you have the right documents and that you are storing them correctly.

Personally, I have a backed-up file on my computer for all my tax documents, separated by year. As I acquire different documents throughout the year for things like donation receipts or big-ticket purchases, I will scan or snap a pic with my phone, and save to this folder. I also save proof of my estimated payments as I make them during the year. In January, when I start getting lots of tax docs, they go in this folder, too. When it’s time to prepare my return, I have everything I need all in one place, including copies of prior year tax returns and all documents that went into them in case I need to refer back to something.

I suggest taking this approach as it makes everything else run seamlessly, and prevents me from losing shit. Make a folder in a drive or on your computer (back it up!) for all of your tax documents. Throughout the year, whenever you get something related to your taxes, just pop them in the folder. An added perk is if this folder also syncs-up with your phone, so no matter where you are, you can refer to them. It surprises me how often I need to pull up copies of my prior year tax data while I am out and about (I’m not making this up lol). It’s really so helpful to have!

Also, if you ever get audited, or get a notice from the IRS, just being able to quickly, efficiently, and calmly pull up all of your documents will help you avoid stress and can potentially save you money in penalties and additional tax that you may not owe.

I get a lot of emails from people who don’t have records of their returns from the previous year - or they only have them in paper form. These documents are important! Take the time to get them scanned in and backed up! I always recommend that my clients store everything electronically as a backup. Every single thing you use for the return should be saved electronically. All of your W2s, 1099s, receipts, etc.  

In order to file your current return, apply for a mortgage, rent an apartment, or qualify for financial aid, you’ll need to have good tax records. It’s good adulting practice to hold these financial docs with high regard, always treating them as if they are incredibly important. Because they are.

If you don’t have any documents from prior years, but you want to obtain them for your records, you can pull copies of your transcripts from the IRS online. Also, if you need to prepare your returns for this year and don’t have the documents you need such as W2’s, 1099’s etc, they can be pulled from the IRS as well as part of your transcript. The IRS keeps track of the docs that are filed with them using your SSN (thank goodness!). This is how they confirm your return is correct. If you feel like you might be missing something, check with the IRS directly via their website.

Your Address and The IRS

If you move around a lot, make sure to always have your mail forwarded with the post office. The IRS will mail any notices they have to the last address on file. If you’ve mailed a paper return with a new address that perhaps they haven’t received/processed yet (paper returns take several weeks), and there’s an issue with an old return, they will send notices to that old address. If you don’t want to set-up mail forwarding for whatever reason, you can change your address manually with the IRS by filing a separate form. It is also highly recommended to do this if you move mid-year between tax returns.

Do It Yourself Or Hire A Pro?

It’s totally possible to do your return on your own using something like TurboTax. If all you have is a W2 (or a few of them) you totally should. There’s nothing more that a tax preparer can do for you and your refund in a situation like this due to the recent tax changes. There’s very little wiggle room if all you have is a W2. If you aren’t totally disgusted with the idea of doing your taxes yourself, don’t spend the money to have them filed. TurboTax has great customer service as well, and someone will walk you through the whole process if you need it.

With that being said, if you have any 1099-Misc income, issues with multi-states, just got married, or own a home / other assets, it is worth it to have your tax return filed by a professional as there are usually ways they can save you money.

How To Quickly Pull Your Shit Together If You Are Freelancing or Self-Employed

If you freelanced, had a side hustle, or were self-employed and have not kept a good record of your numbers during the year, don’t worry… you can quickly get your act together. Start by logging into every bank and credit card account you used for business stuff during the year. Do an export of the account activity into an excel doc for the entire year. When it’s in Excel, it’s much easier to see than viewing each statement PDF/paper separately. Once you have it in Excel, sort/filter it by the vendor, so all the transactions are grouped together. Then you can quickly sum everything you spent on software subscriptions, taxis, etc. and quickly get a picture of your income and expenses for the year.

Once you have it all together, compare the total income according to your records and what’s on your 1099s. Just because you didn’t get a 1099 doesn’t mean you don’t need to claim the income. If you only claim income that was reported, and someone issues you a 1099 late or the 1099 goes to the wrong address, the IRS will still get it but your income won’t match up. You’ll then get a letter from the IRS with penalties and interest for unreported income.

Every dollar of income you received needs to be reported, regardless if the amount is on a 1099 or not.

If you keep separate bank accounts for business and personal, Wave is free to use and will help get your books together quickly. If you don’t keep business and personal separate, QB for Self-Employed is a good option.