★ Money Challenge #7: Start on Your (oh-so-fun) Taxes
This is part of our Weekly Money Challenges.
Be sure to check off any you’ve missed!
Ugh, Taxes! Am I right? (Yeah, I’m right.) Like the saying goes: “In this world nothing can be said to be certain, except death and taxes.” – Ben Franklin
It’s unavoidable, so let’s get started.
If you are anything like me, once you start a task (especially one that you dread doing) it goes a lot faster and is usually less painful than you expected. Just starting takes away all the pressure!
So your challenge this week is to get *started* on your taxes!
You likely already know what the first step is, but here are some prompts to get you going:
- Find all your w-2s and 1099s
- Download statements for your student loans
- Download statements from your investments/real estate
- Find all those boxes of receipts (!!!)
- Start typing stuff into your software
- Pick up the phone and call your accountant
Let us know what steps you took over in our forums.
A job well begun is half done! -Mary Poppins.
– Derek, Master of Challenges
PS: You can see how last week’s challenge went by clicking here.
As usual, we had some great ideas and comments for this week’s challenge over in the forums.
Here’s some of the highlights…
I organize my finances throughout the year to make tax time easy:
-I track my income in my budget at the gross level and then subtract out income and payroll tax withholding so I always have a total of taxes withheld to date and a projection of the rest of the year’s tax withholding
-I use separate categories and tags for my tax items in my budget so I always have the totals to date (including tax deductible charitable donations, property taxes, rental activity)
– I keep an electronic folder titles “current year taxes” where I put in all my tax-related receipts during the year
-I check my income tax withholding several times to make sure we won’t owe additional amounts at tax time (generally I do this after a big raise or bonus and then at the end of November).
I use tags to mark taxable income in the miscellaneous income category
I have separate categories for deductible and non deductible charitable contributions
For my rental property, I use categories for expenses that match the Schedule E
Other categories that break out tax items include car registration fees, contributions to 529 plans, IRA contributions -Kathryn Hanna, Making Your Money Matter
To make life easier when it’s time to break it all out and make it happen, though, I consider it tax prep-time all year long! When I update my real estate income or have expenses, it goes into the spreadsheet. When I have business expenses, I log the information as soon as I’m back at my desk. I’ve developed a spreadsheet with line items for all my recurring items and just fill it in as soon as I have the relevant items, so by the time I need to file, almost everything has been scanned and logged. –Revanche
I have started getting some of my documents for taxes and have been inputting them into TurboTax as I go along! Taxes seem to be a breeze this way for us. So far, I’ve received a 1099-INT for a savings account, my church taxable donations, and my childcare expenses from our previous daycare we used last year. I love how TurboTax learns what you need and then reminds you to check for them each year. I use that as my guide to collecting all my data. -Steven, My Family on a Budget
-Derek, How Do I Money?