Creating Order Out of Chaos


As relevant tax records start filling mailboxes, how can you make sure your tax preparation goes smoothly and efficiently this year? Here are some tips.

2. Time to sort. Now that everything is all together, the best practice is to sort your information into the same buckets used on your tax return. At a minimum, sort the information into the primary categories below. If you have a lot of one category, sort that stack into the following sub-categories.



Organize Tax Records 2016

3. “Not sure” bucket. There may be things you receive that you are not confident about needing for tax filing purposes. These items should be gathered in one place for review.

4. Sum it up. Once the information has been categorized, create a summary of the information. This summary can be a printed copy of an organizer, or it could be a simple recap you create.

5. Is something missing? Pull out last year’s tax return and create a list of things you needed last year. Use this as a checklist against this year’s information. While this process will not identify new items, it will assist in determining missing elements that qualified in prior years.

6. Finalize required documentation. Certain deductions need substantiation and logs to qualify your expense. Common areas that need this are business mileage, charitable mileage, medical mileage, moving mileage, non-cash charitable contributions, and certain business expenses. These logs should be maintained throughout the year, but now is a good time to make sure they are complete and ready to go for tax filing.

It is very easy to overlook something given the lengthy list of taxable income items, deductions, and credits. By following these tips, you can significantly reduce that risk.