By now, I’m sure you’ve noticed the ominous swell in mail volume. Tax season is upon us. There’s a plethora of formal-numbered forms slowly heading our way. But this isn’t a death march – don’t be so dramatic. Tax season doesn’t have to be all doom and gloom. (February weather has that covered.) With some upfront planning, we can, in fact, sail through this season of accounting and reconciliation.

Block off the Time You Need to Tax Prep

Here’s the most important piece of advice I’ll offer: cordon off time to gather and process your documents. Don’t assume you’ll squeeze this in when you have a little free time. And don’t assume that, because you have an accountant, you don’t have any meaningful responsibility in your tax preparation. Tax prep is a team sport.

Time blocking is one of PTA’s top time management techniques because it’s a proven tactic, one that enables us to do what we’ve deemed important to do. It’s insurance – protection if you will. So, step one, schedule time on your calendar to pull your information together.

Use the Tax Organizer as Your Guide

Most accountants supply their clients with a tax organizer of some sort. If you’ve been with your accountant for a season or more, their organizer will be highly comprehensive. But even if this is your first time with the professional, they should provide a solid outline of what will be needed to service you. Use their information as a guide.

Try to collect everything outlined before you submit your information to the accountant. Avoid having to go back-and-forth with your service provider. If time does gets tight, go ahead and submit, noting that documents X and Z will be forthcoming.

Set Up a System for Collecting Your Forms & Documents

If you haven’t already done so, set up a physical tax folder. This is where you’ll store your incoming forms and statements as they trickle in. In fact, go ahead and set one up for 2023 as well. Throughout the year, as you receive pertinent tax information (loan payoffs, donation and major purchase receipts, invoices, etc.), you can slide these documents into the folder for easy access next tax season. If you’re ready to go fully digital, establish an online portal, like a folder in Evernote, where you can electronically capture – and easily share – your documents.

Take Advantage of Electronic Solutions

Many financial institutions now offer online access for key forms. This means we don’t have to wait for everything to arrive via mail service. Chances are you can find, for example, your mortgage and savings interest forms right on your bank’s website. The same goes for your investment and/or retirement holdings. Realized gains and interest earnings are just a few clicks away.

If your accountant is set up for digital information exchange, you can do most, if not all, of your tax prep document sharing without ever touching a piece of paper. Pull down the form from your institution and upload it to your accountant’s portal. This is especially handy if you run into the dreaded “updated” form situation. Sometimes the updates arrive weeks after the original.

The IRS has stepped up their digital game, too. One can now file electronically. The process is pretty straightforward. Best of all, it’s undergirded with robust security. If you haven’t filed (or paid) electronically, plan to spend a little time getting set up. There are one-time steps you’ll be asked to take to prove and secure your identity. It’s worth your time to set up an account that will eliminate the need for physical paper and check exchanges.

Set Yourself Up for Success Going Forward

Getting through this tax season productively is goal number one, but there are things you can do now to make tax prep even easier in 2023, and beyond.

Quarterly Payments

If you pay quarterly taxes, now is the time to set up reminders to pay in a timely fashion. The dates for 2023 are set. Better yet, because the dates never deviate far year-to-year, consider setting up annual recurring reminders for the months of January, June and September. (Include April if you don’t make your 1st quarterly when you submit your annual filing.) The IRS even allows you to schedule your payment drafts, so if you’re set up to where you know the funds will be in the account you designate for payment, you can schedule all your payments for the year now and be done.

Set Up a System for Document Capture

Time spent hunting down documents is time that could be better spent on something else. Set up a “Current Tax Year” folder now that you can use throughout 2023. When you make a donation in, say, June, slide that receipt in the folder. When you purchase that new electric vehicle in August, tuck the PO in your folder. And when you pay your property taxes in October…..yep, receipt in the current tax year folder. The Current Tax Year folder will be your best friend come February 2023. As stated above, this can be a 100% digital system if you choose to go that route. Just remember to pick a lane, one lane. Two systems will cause confusion.

Medical Deductions

If you’re able to deduct medical-related expenses, you might choose to set up a specific folder for this category. Beyond doctor fees, prescriptions, insurance premiums and even travel mileage may be deductible. Swing wide with what you save/file. Even if you aren’t sure, your accountant will be able to determine what qualifies.

Keep Things Tidy

Once you’ve wrapped up 2022, throw away that which you’ve determined isn’t eligible, necessary or valid for accounting. The Current Tax Year folder should only store what is needed for the current tax year. Always maintain a copy of your filed tax return. Ask your accountant for a digital copy. Set up a tax return folder on your computer for storage. Back it up to the cloud. Finally, per the IRS, one should keep supporting tax documentation for a period of 3 years (6 years if you’ve not reported income you should have). So set up a system for discarding old documentation to ensure you don’t get overrun with paper.  There is more information about record retention recommendations from Configuration Connection.  

Productive Tax Prep Saves You Time and Energy

It’s time we take the dread out of tax prep. We’re in control here. We have the skillset needed to knock out this annual chore, quickly and efficiently. Start by giving this nonnegotiable task the official time on your calendar it warrants. Use the time to pull together what you need for proper accounting. Take advantage of available resources like online forms and digital platforms. Importantly, as you work though 2022, keep one eye focused on the system you’re using. Are there tweaks you can make to make tax prep in 2023 even more productive?