I am flummoxed by people who come to me half crying in March that they don’t have their @$(* together because taxes are almost due and they haven’t done anything because they can’t find their damn receipts.
This is my face: O_o
Then I realized that maybe… y’all don’t know how to get organized for tax season.
I’ve been doing my taxes since I could legally work (age of 16), and this is how I’ve always done them.
I never stress out when I do taxes because…. I am organized year-round. I basically document, log and file every tax receipt that comes my way, and keep it all in one spot, ready to go when it comes time do do my taxes.
My accountant (when I had one), told me I made his life so easy, he charged me only $20 to do my taxes because I kept such detailed and clear notes.. this was all back in the day, before I realized tax software existed for all of this.
1. MAKE A LIST OF ALL THE TAX DOCUMENTS YOU EXPECT TO RECEIVE
My list is all the financial institutions I deal with, charities I donated to that year and expect a receipt from, and that’s about it.
Every time a tax document is available to be printed or saved to my computer, I cross it off my list so that I know I have it.
Then I wait. And wait.
…and sometimes pester the bank to give me my damn tax document so I can file my taxes early and be done with it.
2. DURING THE YEAR, LOG AND FILE YOUR TAX RECEIPTS AS THEY COME IN
I log every single tax receipt transaction in my budgeting tool, and file the receipt away into a folder or envelope immediately.
I usually highlight the line for the tax receipt so I can scan through each month and see it in green and immediately know it’s meant for taxes for this year.
It’s always easier to have it already logged in an Excel sheet, so you can just copy and paste the info into another Excel sheet, and add things up with a computer rather than doing it manually with a calculator and pencil.
Plus a computer is better at it than you are.
You can always do it manually and then check with a computer, but I tend to make mistakes on a calculator and I never do that with Excel.
3. HAVE A FOLDER OR ENVELOPE READY WITH THE TAX YEAR ON IT
You can do this multiple ways — the lazy way or the detailed way.
THE LAZY WAY OF KEEPING TAX RECEIPTS ORGANIZED
One folder or one envelope, and put the tax year on it (e.g. 2014).
Throw every receipt you get in there. Don’t bother to sort them, just pack it all in.. as neatly as possible.
Deal with the sorting bit when it comes to tax time.
Note: I found this works only if you have less than 25 receipts or documents. Otherwise, you better get more envelopes.
THE DETAILED WAY OF KEEPING TAX RECEIPTS ORGANIZED
One folder labeled with the tax year with multiple envelopes, each with a little note of the tax year and the category at the top of the envelope.
Each envelope is a category, like “Health” or “Transportation”, where you throw in your public metropasses so you can claim a tax credit, or whatever else you normally claim credits for.
On top of each envelope, you can also write the Date, Amount and Note in a neat little row so that you know what you threw in there without having to dump it out and sift through it.
Then you can either log it in your budgeting tool like I do, or just sit there with a calculator and add up all the numbers you’ve written on the envelope.
4. SCAN EVERYTHING AS A BACKUP
Scan everything you want to submit as a tax credit, or need to do your taxes.
I put it into a folder I simply name: TAXES_Current Year (e.g. TAXES_2014)
Keep the physical receipts and documents if you need them for the current tax year, but scan everything just in case something happens to the original.
Better a scan on hand, than nothing at all.
And that’s it. That’s all I do.
SO THIS IS WHAT I DO EVERY TAX YEAR:
Every year, I just open my budgeting tool, filter through to find my tax receipts by colour (now I have a fancier way with filters), and copy and paste them into a separate Excel sheet named “TAXES_[CURRENT YEAR]” like “TAXES_2014.xls“.
Then I review the transactions, sort them into tax categories in that Excel sheet (e.g. Transportation, Health), and add up the numbers with Excel.
Then I double-check my work, and enter whatever numbers appear on that sheet into my tax software.
No muss, no fuss.
I was audited last year because I was in between countries, and I had everything ready to go for the audit in about 10 minutes.
I just copied and pasted the “TAXES_2013” of my scanned documents to my desktop.
Then I reviewed each item I was going to send to the Canada Revenue Agency, and also sent them my TAXES_2013 Excel sheet with sorted categories and expenses for each receipt I submitted (including their scans) to show them how I got every single number I entered.