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10 Tips for Simplifying Tax Preparation

Tax preparation can go smoothly – if you’re ready.

Every January, those envelopes start arriving in the mail with Important Tax Document Enclosed stamped on them. What do you do with them, besides bemoan the fact that tax season is upon us? a.) Put them in a drawer, b.) Store them with other papers you receive from their senders, or c.) Drop them immediately in a file folder or large envelope clearly marked, “TAX DOCUMENTS [YEAR]?”

The correct answer is c.), though there’s a very important addendum to that: Put that file folder or envelope in a logical place that you won’t forget. Write yourself a note on your calendar that reminds you where your incoming tax documents are stored.

That’s the first tip. There are many things that you can do ahead of time so that when it’s time to tackle the 1040 or whatever forms and schedules you file, you won’t waste time hunting down documents you need, or worse – have to reschedule your appointment at the last-minute.

Start Early

If you begin to assemble and organize everything you’re going to need in February (even if you’re not planning to file until the last minute), you won’t experience that last-minute panic that occurs when your appointment is in an hour and you realize you haven’t gone through your bank statements to find every last expense.

You don’t have to take a QuickBooks class to know how to be ready for tax preparation. Here are a few simple tips – some do’s and don’ts — that may just seem like common sense, but they’re often ignored:

If your accountant has mailed you a tax organizer or tax planner, do complete it thoroughly. He or she may work primarily off of the forms themselves, but this is a good way to make sure you haven’t forgotten anything.

Don’t bring everything in to your accountant stuffed in a large envelope or box. You may have to reschedule for another time so you can get everything organized.

Do tell your preparer if there have been any significant changes in your household or financial situation. You may not consider them significant, but they may make you eligible for tax credits that you don’t know about.

Don’t come to your appointment expecting to claim the home office deduction unless you have all of the necessary information. The IRS looks closely at this element of the 1040, and it asks a lot of questions. Know the rules.

If you have particularly complex tax-related income and expenses, do set up an organizational system that you can add to throughout the year – starting January 1. If you’ve had QuickBooks training, you know that the product helps you track some of this. But your accountant needs paper, and he or she needs a thorough accounting of your income and expenses. Use large envelopes or file folders, or scan everything into whatever organizational software you like. File documentation for anything that might have impact on your return, and maintain a running list. File your bank and credit card statements, your travel records, receipts, paystubs – anything relevant.

Don’t assume that you’ve received all of the tax documents you need. It’s your responsibility to follow up if you haven’t gotten something. Keep a running list throughout the year of financial institutions and other companies that owe you paper in January. If you’ve moved or changed jobs, be sure they can find you.

Do use QuickBooks to track income and expenses thoroughly.

Don’t assume that QuickBooks can prepare you completely for tax preparation. Learn what it can and can’t do.

Finally, do be respectful of your accountant’s time. Make your appointment as early in the season as possible and reschedule immediately if a conflict arises. Postponing your meeting won’t change the outcome.

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