Is managing your finances taking too much time? Here are some tips for simplifying your finances from a “tax” perspective that can help create more time to enjoy your life!
Organize your tax records as you go. Scrambling at the last minute to assemble the records necessary to prepare your tax return can take considerably longer than assembling them throughout the year as you receive them.
The trick to staying organized can be as low-tech as placing the receipts and other documents that support your deductions and income into an accordion file as soon as your receive them.
Or staying organized may be as high-tech as scanning the receipts and documents and filing them electronically, or using personal finance software to track your expenses and income. If the software or app allows you to flag deductible expenses, you may be able to simply print out a report at tax time that lists your income and deductible expenses for the year.
If you itemize deductions, it is a good idea to keep records of your medical and dental expenses, taxes you paid (real estate taxes, as well as state and local income or general sales taxes), interest you paid (mortgage and investment), gifts to charity, casualty and theft losses, and a few other miscellaneous expenses.
Direct deposit your tax refund. You will receive you refund sooner and avoid having to deposit a paper check if you provide directions on your tax return for your refund to be electronically deposited into a financial account.
You can even have your refund split and deposited into as many as three financial accounts, such as your checking account, savings account, and IRA.
Hire a tax professional. Unless you thrive in the minutia of the tax code or have a super simple tax return, hire a CPA to prepare your tax returns. You will still need to provide the information that will be used to prepare your returns, but the tax professional can handle selecting, completing, and filing the proper forms for you. Plus, with a tax professional in your corner, you have access to year-round tax planning advice that may help reduce your taxes and avoid costly tax mistakes and penalties.
See also “Investment Planning Tips for Individuals” for suggestions in managing your investments while reviewing the tax implications.
Davis & Hodgdon Associates CPAs is a full-service public accounting firm with offices in Williston and Rutland Vermont. The firm has served clients in the Burlington and Rutland metro areas and beyond for more than 25 years by providing progressive, proactive services through expert staff, sophisticated technology, and unparalleled efficiency. For more information please call 802.878.1963 (Williston) or 802.775.7132 (Rutland) or email [email protected].
Bret Hodgdon, CPA, CFE, CFP®, partner, Davis and Hodgdon Associates CPAs