After the Perfect Storm Blows Over...
by Bob Williams
You got this—all you have to do is start!
We make filing taxes delightfully simple with one, flat–rate price. Every feature included for everyone.Start filing
My, don't we look comfy. Stretched out on that big old couch, chips-and-salsa locked and loaded. You even dug up one of those little paper umbrellas from last summer's pool party for your iced tea!
Does the purple umbrella clash with your pink bunny slippers? Nope, we didn't think so, either.
Fashion statement aside, you deserve to feel proud of yourself right about now. You got your paperwork organized early last year, and when it came time to file your taxes, everything you needed was right at your fingertips. Got your return filled out and e-filed in record time, right?
Is that "We Are the Champions" we hear playing in the background?
If you can't hear the music, chances are you might have had a slightly different income tax experience this year. In that case, do words like "struggle," "frustration" or "overwhelmed" come to mind? We can help. Take notes, and the next thing you know, we'll have to order more of those purple paper umbrellas.
Take a Break
The first order of business is to take it easy for a bit. Then, once you're back on an even keel, pick a day on your calendar to start a new tax life.
No, we didn't say a new identity -- just a new way of keeping the details of your life where they're easy to access for next year's income taxes. First on the list is a central place to keep Your Stuff. We recommend a document box -- available at most any large discount store -- to hold those all-important pieces of paper we generate during the year.
And we aren't going to just dump those pieces of paper in the box over the year. When you buy the box, buy some large binder clips as well. Label the clips with categories of documents you're likely to need next time you do income taxes: House, charity, child care, auto, and so forth. Simply clip a receipt or invoice with others in its category as you get them and you'll stay organized and way ahead of the game next tax season.
You could use file folders, but small receipts tend to slip out of them, so we like file pockets better, if that's the system you prefer.
Again, you want to stay current with your filing, so don't let the receipts pile up. After a while, it just gets too daunting to catch up and then the system falls apart. By filing away documents as you get them, you can find the receipt for that couch you donated to the charity thrift store and put it where it belongs -- on your tax return.
Plan Your Work, Work Your Plan
Believe it or not, now is a good time to think about your strategy for the next filing season. Granted, the thought of pondering deductions and filing status now ranks right up there with getting poked with a sharp stick. But if you do think about these things now, it can take away some of the pain of next April 15.
Did you find yourself paying a sizeable tax bill this year -- or did you get a large federal refund? Either way, you may need to revisit your withholding setup. Our recommendation is generally to aim for a "flat" tax landscape -- one where you don't get a refund, but you don't owe any tax, either. That puts the maximum amount of cash in your pocket with every paycheck.
Your Early Warning System
1040.com has a number of tax calculators you might find useful -- especially at this time of year. Our Federal Tax Refund Estimator, for example, could give you a heads-up on what you might expect for next tax season.
Oh, and one little reminder: If you pay estimated taxes, don't forget that the summer quarter is upon us, so you may have a payment due. Don't let that one slip by you!
In general, just remember that whatever steps we take now to get organized and stay organized will have a big payoff next year at this time.
Oh! There's that music again … "We are the champions, we are the champions …"
Sign up for more of this.
Subscribe to our blog for year–round finance strategies and tax tips. We’re here to remove the dread from filing taxes.