If I were in a public setting I would ask for people to raise their hands to indicate whether or not they enjoy filing taxes. I’m certain I’d see more hands raised for the “not enjoying” taxes option than the other. It is often said that there are three certainties in life: birth, death and taxes.
Taxes are never a fun subject, especially when it means we have to pay out more money to Uncle Sam. I like to do all I can do minimize that cost.
There can be a lot of work that goes into filing taxes and while many hate doing so, it still requires our attention to ensure the tax filing process goes smoothly so we can make sure we have jumped through all of the hoops the IRS throws our way.
However, there are a number of things you can do to make it simpler for you each and every year. Just make sure to consult a tax professional if you have any tax specific questions.
Keeping Good Records are Key to Filing Taxes
One of the best ways to make filing taxes smoother is keeping good records. There are various things that might impact your taxes for the better or worse and a good record keeping system is vital for this.
Do you have business mileage or mileage for trips to the hospital/doctor? If you do, then it’s possible that mileage would be deductible for you per a user friendly tax calculator.
An easy way to keep track of this is by having a small notebook in your car. Do keep in mind that the IRS wants specifics and often looks at bloated mileage as a red flag, so make sure to notate the Who, What, Where and Why of your trips along with the specific to/from mileage and date. We do this ourselves for our business and it takes only a minute to record the information.
A similar thing can be done for medical expenses, giving to charities, etc by keeping a folder of all pertinent information that relates to giving or expenses that might qualify as a tax deduction. Please keep in mind that many deductions are only available if you itemize your taxes.
Keep Your Professional Life Separate from Your Personal Life
If you run your own business like I do, then you know how hectic life can get when you’re dealing not only with your personal finances and your professional finances.
Some of these things might be difficult to keep completely separate, but the easiest way to do so is by setting up a business checking account. We have our business account with US Bank, as they have no fees and are easy to use. This allows you to deposit all of your professional income into the account and not have to worry about co-mingling it with your personal income.
This might seem like just ANOTHER thing to manage, but it actually makes life much easier and did not take much for us to set up. We set it up with the same bank we have our personal accounts with and thus have the same login for both accounts and can take care of everything from one place.
Having a business account will also make it much easier when your filing taxes as you should be paying for business exclusive expenses straight from your business account throughout the year and won’t have to separate it from your personal expenses.
It’s not just your bank accounts you want to keep separate. You also want to keep charges separate from personal charges – thus the need for a business credit card. If you don’t have a business credit card, here are some of the best available – some even offer nice sign-on bonuses.
Don’t Wait for the Last Minute
I hate to break it to you, but tax deadline is coming up very shortly, don’t put off taking care of all the steps associated with filing taxes to the last minute. I’ve seen way too many people in my line of work do this and it only ends up in having headaches at the end of the day.
I know that staying on top of your records might not be the most fun, but a little bit of work throughout the year should make it much easier for you when it comes time to be filing taxes.
Mrs. Frugal Rules and I discuss our business mileage and expenses each month and I enter them into an Excel spreadsheet. This allows me to know where we are at at any given time, but it also means that at the end of the year the majority of my work is done and I can forward all of our information to our CPA.
Another benefit of not waiting until the last minute is that you can also use it to analyze your withholdings so you’re not getting too big of a tax refund the following year.
Hire Professional Help to File Your Taxes
With the rising popularity of filing taxes online and tax preparation software it allows many to handle filing taxes simply as the program walks you right through it. For years I used H & R Block’s software and had no issues (and enjoyed it, to be honest). With the growth of our business we’ve hired this out to save time and have an expert do them for us.
As someone who likes to be frugal and do things myself, this was a difficult but necessary decision. It has saved me a lot of time and I now have the confidence that our taxes are done correctly and done by an expert who’ll maximize our return. If you find that you’re over your head in filing your own taxes, then a tax professional is a great option.
If you’d rather handle filing taxes on your own there are several good options to choose from, as seen below:
I’ve personally used three out of the four above, and had a relatively good experience with each though defaulted to the H & R Block option for a number of years prior to hiring out our tax preparation needs. If you do use one of the above options keep in mind that most of them offer some sort of free Federal filing as well as discounts on State filings.
Additional resource: If you’re looking for a simple way to stay on top of all your finances, then check out my favorite new tool – Personal Capital. Completely free, it allows you to track your spending, monitor your bank and investment accounts and watch your net worth plus many other tools.
How do you handle your taxes? Will you be filing taxes on the day of the tax deadline, or do you get them done early? What tips do you have to make filing your taxes easier?