★ Money Challenge #7: Start on Your (oh-so-fun) Taxes

Posted January 16, 2017 6:00 am by with 8 comments

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.


UPDATE!

As usual, we had some great ideas and comments for this week’s challenge over in the forums.

Here’s some of the highlights…

For those with Fidelity account, you may be eligible to get Turbotax premier for free.

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).

Some examples:
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?

Derek heads up the Weekly Money Challenges here at Rockstar Finance and over in the Rockstar Money Forums. He also runs an outrageous blog and podcast over at HowDoIMoney.com – check it out!

8 responses to ★ Money Challenge #7: Start on Your (oh-so-fun) Taxes

  1. Mrs. Picky Pincher January 16th, 2017 at 9:29 am

    Urff, it’s already that time of year, huh? We started receiving plenty of tax forms this week, actually, so we’ve started storing them. Once we receive tax documents from our jobs, student loan interest info, and online income stuff, we’ll go ahead and file. I’m crossing my fingers that taxes won’t be too horrible, but since we bought a house in 2016 I’m a little nervous. We might need to increase our withholdings for 2017 but we’ll see how it goes!

    Reply

  2. Full Time Finance January 16th, 2017 at 11:34 am

    A little early here for me. I typically don’t see brokerage and work tax documents until the first week of February. We do have our donation documents in order. I’ll end up executing immediately upon getting the documents.

    Reply

  3. lindy January 16th, 2017 at 1:25 pm

    I tried to start over the weekend. But quickly realized it would take me longer to hunt down all the numbers from a variety of places than just have patience and wait for my official paperwork end of month/beginning of February. Kudos to anyone who keeps track of that stuff all year long!

    Reply

    • derek January 16th, 2017 at 7:19 pm

      I feel ya. This was the first full year we had someone keeping track of everything monthly/quarterly. We’ll see how it goes and if staying organized throughout the year helps.

      Reply

  4. Mrs. Groovy January 16th, 2017 at 1:44 pm

    Thanks for reminding me I just received a Fidelity notification about an available tax form. They send so many emails I tend to mostly ignore them. We probably won’t get our employer statements until February but now is a good time to start gathering other documentation.

    Reply

    • derek January 16th, 2017 at 7:21 pm

      haha, I feel ya there. Too many mailings and I start to ignore stuff also. Fortunately most of the places that send tax related info you can easily log in and download only the stuff you really need.

      Reply

  5. Go Finance Yourself! January 16th, 2017 at 4:22 pm

    I wish I could knock mine out now but I’m still waiting on some tax forms. One good reason to get your taxes done early, aside from just being proactive about it, is a lot of fraudsters like to file false tax returns to get a refund in your name. This happened to a coworker a few years ago. The faster you file your taxes, the less likely this is to happen.

    Reply

    • derek January 16th, 2017 at 7:22 pm

      I never thought that the faster you file, the less likely you are to be a target for fraud. Makes sense though!

      Reply

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