As New Year is about to set in so as the tax season. Organizing tax documents is crucial as it gives you a sense of orderliness and big (financial) returns in no time. The task of arranging all the necessary documents for filing your taxes is definitely challenging and time-consuming.
Some of the common questions asked during the tax season are “What does my accountant need to do my taxes?” and “Why should you organize your taxes now?” Don’t be pressured with these queries, instead be equipped with the necessary information to get things in order and to get started.
How to Organize Your Tax Records
Your basic item in organizing your tax records is a filing cabinet to organize all of your relevant documents. Note that you have to sort your papers based on their level of relevance.
There are a number of items that you should keep for a month or three. Utility bills like water and electricity and sales receipts from small purchases are included in this category. Don’t miss your bank deposit slips and atm receipts for inventory purposes.
For a one-year safety, keep your mortgage statements along with your insurance records, payslip, and checkbook ledgers. Bank statements, W-2 and 1099 forms, disability records, medical bills and receipts for tax purposes must be kept for 7 years.
Most importantly, you should keep indefinitely your annual tax returns, legal documents like birth certificates and passports Joining this category are deeds of sale, living wills, real estate certificates, active insurance policies and education records like diplomas.
What Does My Accountant Need to Do My Taxes
In filing your taxes, your accountant would require you all of your business accounts. Expect to submit to him/her the bank statements for the entire year. Also, include statements of your personal and business credit cards as your accountant would need these documents.
Another idea on how to organize your tax records with your accountant is by providing him/her your loan statements. For this type of document, your accountant is keen on checking the closing balance of your year-end date. Also, include any financial investments or agreements that you have for the year like a new property or auto purchase.
Other Important Things to Keep
Other things that you need to keep in case your accountant would need them are your complete payroll records during the year. If you have a business whether online or not, keep your sales invoices too and your total sales prior to any deductions.
Don’t forget that receipts of your expenses and invoices of your purchases are essential documents too. If you missed organizing these documents, your tax bill might increase. That said, it’s better to keep a list of all the things that you need to hand over to your accountant.
Benefits of Being Organized
Increasing your productivity is the best answer when asked as to why should you organize your taxes now. By keeping things organized, you can allow your extra time to other important things like spending quality time with your family. More so, being organized reduces anxiety and stress as you are able to beat your deadlines and take a breather.