There’s one word I want to eliminate from your vocabulary: “rummaging.”
Plenty of my Richland County clients are familiar with that word around tax season because it’s what you’re doing to find your tax documentation. “Where is that 1099 I got in the mail last month?” or “Where did I put my W-2s?”
When you’re already stressing over the deadlines and the fear of owing Uncle Sam, a hefty chunk of change, disorganized files, and missing paperwork might just be enough to put you over the edge.
And you’re not alone, apparently…
- A typical business executive wastes an average of six weeks per year due to disorganization. That’s a lot of time (almost a whole month of work) and money wasted searching for lost paperwork.
- The average taxpayer can overpay the IRS by hundreds of dollars simply by not being organized. Disorganized files can lead to missed deductions or itemizations.
- The average American (outside of the workplace) wastes nearly 2.5 days every year searching for misplaced items.
Plus, it’s just hard to stay level-headed when you’re losing that much time frantically sorting through all your tax documentation. Instead, let’s keep your sanity intact and confidently claim every deduction you deserve.
It may seem obvious, but I want to actually state what you can gain by staying organized:
- Time saved is money earned. Think about all the time you spend frantically searching for misplaced documents. An IDC study revealed that workers spend an average of 2.5 hours per day just looking for information. You can do the math for what that adds up to at the end of the week.
- Get the most out of tax day. Ever heard the saying “You can’t deduct what you don’t document”? Organized records ensure you have all your receipts, mileage logs, and other documentation to claim every deduction you’re entitled to. By the way, if you’re not sure what you can deduct once you have your documents in order, you can always give us a call.
- Avoid Penalties. Missing deadlines and filing errors are a surefire way to land in the IRS penalty zone. Proper organization of tax documentation helps you stay on top of deadlines and file accurately, saving you from those unwanted fines.
Okay, that all sounds great, but how do you actually achieve the right level of organization? Here are a few ideas to help you get started.
Go digital. Ditch the shoebox of receipts and invest in software like QuickBooks or Expensify to manage your finances electronically. It’s easy, accessible, and saves space. (Remember that word we’re trying to eliminate from your vocabulary?)
Regularly review. An easy way to avoid the stress of losing important tax documentation is to consistently check on them far in advance (at least to make sure you know where they are). Don’t let your records become a digital graveyard. Set monthly reminders to review and categorize your financial documents.
Start simple. There’s a lot to organize. You don’t have to take on the biggest task – maybe just one stack of letters from the IRS or receipts that you’ve been actively avoiding for the last few months. Which of those will have an effect on your taxes? Separate those out from the rest. Once that task is done, you’ll find you’re much more motivated to tackle some of the larger organization projects that you need to finish (like finding all of your W-2s/1099s).
Ask for help. You might be an organization wizard, but if you’re not sure which of your documents matters when it comes to your taxes, we can help out. We’ll help you set up a system that works for you, ensuring your records are in tip-top shape.
You’re not just getting organized to live a tidy lifestyle (though an organized filing cabinet is incredibly satisfying). Organizing things means you’re taking back control of your finances, which will keep you motivated to save money on your taxes. (I’ve seen it plenty of times with my Columbia, SC clients.) Plus, you’ll probably find that making organization a habit will reap long-lasting benefits in other areas of your life as well.
Let’s start today on some of these steps and see how you feel differently next tax season. We’ve got ideas to help you get organized this year, so reach out if you want to discuss that. While we’re at it, let’s talk tax strategies for other ways to save on your taxes next year.
What habits are you forming this summer?
Here to help you stay sane next tax season,
Akuathayre Snell