After the hangover of the holiday season is well diminished and just as I’m settling into the new year, a pestering reminder begins hitting my mailbox every few weeks: it’s tax season again. Typically I toss the envelopes printed Important Tax Information Enclosed in a halfheartedly organized location — a folder or a pile of documents that may or may not be related to taxes — and push to the back of my mind the dread of having to eventually pay attention to the documents in that pile.
Tax season has begun, and the anxiety levels are rising for those of us who have yet again failed to maintain a steady record of our expenses ready to insert into our federal and state income tax forms. Though a few of us are remarkably well-organized in many aspects of our lives — gurus in time management who obsessively keep on top of to do lists and others who leap though Facebook and Twitter and LinkedIn like acrobats through hoops — many of us find it too much of a hassle to keep all of the receipts we saved throughout the year organized in a manner that won’t require at least a week to sort through. Some of us don’t even remember why we held on to certain receipts in the first place. Was this receipt intended to be listed as a business expense to be itemized? Or was I planning on recording this one as a health care expense?
Tax season is overwhelming for most and often people throw up their arms at the prospect of gathering all their receipts to properly record and itemize each expense. Many opt to turn in a half-baked tax return rather than spend days or weeks itemizing their tax returns. As a result many people receive greatly reduced tax returns — or even worse, end up owing the IRS because they failed to keep their finances organized throughout the year.
It’s not too late to get your records in order for the April 15th tax deadline, though. There are many applications and techniques you can use online and on your computer to manage your expenses in time for the tax deadline. Here are some tax tips, including software that may help you get your financial documents in order for the day you’ll be filling out that dreaded 1040 form.
You Need a Budget
Though the ideal way to approach tax season is to keep your financial records in order year-round, software such as You Need A Budget (YNAB) can help you get organized quickly enough to make the I.R.S. deadline. “Every day is tax season, not just January through April,” says Yolanda R-L Baker, accountant for the disabled, “but you can still have your bank transactions and credit card statements imported into the YNAB application and even categorized in time for the tax deadline.” Mrs. Baker, author of the book B.I.T.E. Your Bills and developer of a financial and tax preparation program of the same name, highly recommends the software, which is available for both Windows and Mac operating systems for $60. Before buying the software, Mrs. Baker recommends testing out the 34-day full-featured demo to ensure that your bank and credit card issuers are compatible with the YNAB application.
Scan Your Paperwork
Mrs. Baker also recommends using scanners and software applications intended specifically for converting paper documents such as receipts into digital formats and providing a mechanism for organizing the resulting documents. The The Neat Company is one such company she recommends dedicated to providing products for digital records-keeping and tax season solutions such as the mobile receipt scanner NeatReceipts, the desktop scanner and digital filing system NeatDesk — both available for both Mac and Windows platforms — and the Mac-only NeatWorks scanning software and digital filing system, which can be used with 3rd-party scanners (as that HP or Brother printer you just spent a tiny fortune on).
Use Online Tax Preparation Services
Many people use one of the various online tax preparation services such as TurboTax to perform the annual tax ritual. Some of these solutions are even available to use without cost, particularly for the lower-income user(s). One thing to keep in mind when turning to these “free” services is that often they are freely offered under certain conditions (in addition to income); you may spend a good deal of time getting through most of a TurboTax form only to discover that you do not qualify for the free version and will have to invest in a more expensive version. Granted, you usually have the option to immediately have all of the information you’ve input directly imported into one of the service’s other fee-based solutions, but if you were planning on saving some money make sure to research other competitors online to see if you can find a less expensive option before putting in valuable time filling out TurboTax’s forms. TurboTax is a fine product but, in my personal experience, can be frustrating when you discover you could’ve saved a great deal of time and effort if you’d only taken a small amount of time checking the Internet for alternative services.
Use Tools You Already Have
If you are determined not to spend a dime organizing your documents digitally or filing your taxes online, your computer already has many tools you can use to help you out with your taxes. Depending on your version of Windows, you probably have a copy of Microsoft Works installed on your system. Microsoft Works is essentially a stripped-down alternative to the more expensive (and more feature-rich) Microsoft Office Suite of applications; it includes basic versions of spreadsheet and database applications you can use to store information about your financial records. You don’t have to be an expert in spreadsheets to be productive with Microsoft Works; it has a much shorter learning curve than the more expensive Office. The spreadsheet program that comes with Microsoft Works has a lean, stripped-down interface that provides only the basics; upon opening the program, you can immediately begin recording items such as receipts and their values.
If you uninstalled Microsoft Works or the set of applications didn’t come with your version of Windows, Microsoft Office provides all Microsoft Works provides and more. It can be a bit more intimidating to use if you’re not already an expert in its applications, but it’ll do the job just as well (if not better) than Microsoft Works. If you don’t own a copy of Office, you can download the Office-like suite of productivity apps OpenOffice. OpenOffice is entirely free of cost and available for Windows, Mac, and Linux systems, but may present even more of a learning curve than Microsoft Office.
Tax season doesn’t always have to be the incubator of stress we often find it to be. Though you may find it easiest simply to drop off your documents at the local H&R Block, you may find it much less expensive and trying some of these tools while preparing your taxes this year. Rather than pulling out your hair out the night before the tax deadline, you may find yourself letting your hair down and having some fun while others around you are getting increasingly anxious as April 15 approaches.