How to Become a Tax Superhero and Save Three Months of Stress

We all know that huge sense of relief we feel when we finally submit our taxes every April. We can lean back in our chairs and relax having survived yet another manic race to file our return before the omnipresent deadline.

But there is another way. A better way. The superhero way.

Imagine knowing that your taxes are done in January. Yes, that’s right. A whole three months ahead of schedule. That’s three glorious months you can live free from the maddening stress of your tax return. Sounds pretty good, doesn’t it?!

This January I happily handed the bulk of my tax documents off to my accountant (minus a few 1099’s). I was gifting myself with three months free from taxation blues, and giving my accountant the chance to get a kickstart on her tax season with one less client in crunch time.

Superhero Status is Easier Than You Think

Tax preparation has become so instinctive for me, or perhaps just a great habit that I’ve picked up over the years. When I see so many people struggling and stressed out as the deadline approaches, I really feel for them. I get it. It is exhausting to jam a year’s worth of life and activity into a few stressful days.

For me, the key to overcoming the jam, is simply not letting it build up. There are a few things you can start doing now that will make it a lot less painless tomorrow. Where does the jam usually occur? I boil it down to two main areas that cause the greatest stress.

Grab Your Cape and Your Folder

Tax things happen all year long and the associated notes or documents get filed in many different places. It’s in April when we are trying to find all these documents and notes that causes stress. One solution, get yourself a blue folder and get organized.

Superman has his blue uniform and you can have your blue folder. Sounds simple, doesn’t it? My blue folder titled Taxes 2017 is located in my active file drawer in my office. It’s in a place where I can access easily and always see. It stands out from my other plain beige file folders. Every time I have a thought or question for the accountant or a tax related form, it goes into the blue folder.

In January 2017, I bought a small cabin in the woods. The closing statement has already been filed in my blue folder. Couldn’t imagine trying to find this form in April 2018, 15 months away. As my 1099’s come in from work, banks, or investment accounts – they immediately go into the blue folder. I also have a yellow pad in the blue folder so I can write down important “do not” forget things; mostly notes to discuss with my accountant.

Download and Automate

Use technology to your advantage and automate! About 15 years ago, I started using a program called Quicken (I now use Quickbooks). It was a game changer for me. It would connect into my bank account and credit cards, download all transactions and automatically categorize them. After you categorize a transaction, the system remembers it going forward.

So every time it saw a transaction from Raul’s, one of my favorite Mexican restaurants in Glens Falls, it would mark it as restaurant. On a monthly basis, I had anywhere from 25 – 50 transactions. On an annual basis, now we are talking upward of 600 transactions. Most people are trying to sift through and organize hundreds of transactions via crunch time for taxes. No wonder there is a lot of stress around tax time. A little bit every day makes for light work in the end.

Stay Super Organized

Reviewing my downloads every 2 months makes sense for the amount of transactional volume I have today. Because of this automation, I am dealing with a few exceptions that are typically first time charges. The added bonus on top of being super organized for tax time, you get to understand where all your money is going.

Meeting with clients for the last 13 years, many have expressed their interest in understanding where all their money goes. Utilizing a program like Quicken or Mint.com will provide great insight to where you spend money. It’s also a foundation block in building and preserving wealth.

The key to getting ahead is dive right in. You’ll be surprised how easy tax time is in 2018. If you have some tips that make tax time easy for you – please share them and let’s spread the tax prep love together.

And just like Superman with his blue suit, your blue folder will keep you super organized so you can fly through your tax return every year.

NOTES FROM RACHEL
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