7 Money Saving Tips for Tax Season

Once again, it is that time of year most business owners and individuals despise as they plan to file their current tax returns. Gathering the receipts and records is important for all returns, as they provide the necessary verification of income and expenses. Sadly, many individuals lack the discipline and understanding necessary to recognize that the more efficient they are in their record-keeping process, the greater reduction they will recognize in the preparation cost of their returns and the protection this provides them in case of an IRS audit.

Truth be told, completing the tax process for some clients takes a lot longer than it does for others. It is also true that providing better information goes hand-in-hand with achieving an accurate tax return. Simply put, if your tax professional does not receive and/or read the required infomation they cannot account for it and file it.

Scriptures shows us the benefit of a prudent person. “Prudence is a foundation of life to the prudent but folly brings punishment to fools” (Proverbs 16:22, NIV). As you prepare your taxes this year consider these seven important tips that will help you find the path to being a prudent person.

1. The first and most important step is to schedule an appointment with your tax professional long before tax season. This allows you to discuss the best organization techniques and the cost benefits of their process as most tax preparation professionals charge by the hour. My suggestion is to schedule an in-person or phone meeting with them in January or February. You will need to provide them with all the information by March 1st and no later than March 15th so they can complete your return on time.

2. Ask your tax professional what they recommend regarding software. Look into acquiring a scanner so you may scan all your tax receipts and statements on a regular basis. Utilizing technology such as Quickbooks, Quicken or a variety of other accounting software enables you to be more organized in your record keeping.

3. Make it a habit to write at the time of a transaction whether or not it is a receipt you will need for taxes. Throw away receipts you don’t need for tax or warranty purposes - scan the others.

4. If utilizing a software program is just not your type of organizational technique, then a shoe box will work. At the beginning of each year, get your shoe box ready. Get 12 Ziploc bags, and write a month of the year on each bag and keep those bags in a box. When you are tidy-ing up the house, cleaning out the car, wallets and handbags, take an extra minute to put the receipts in the appropriate month’s bag in which that particular transaction took place. At the end of each month, create a list of expenses by category and total them so it is not necessary for them to look at each receipt separately.

5. Keep paper in your car or use an app on your phone for recording your mileage records for medical, charitable and business deductions.

6. It is important to keep your non-cash charitable contribution receipts.

7. Ask for a list from your tax professional showing other items you will need to provide them in order to accurately calculate your taxes. When you provide your tax professional with the necessary information, discuss any receipt or expense for which you may have questions.

Your strong organizational efforts will create a level of respect between you and your tax professional. They will see they can truly use their level of knowledge to help you make the right decisions rather than sifting through a mess of receipts and expenses. The tax professional industry is always working to help clients make choices with filing dates mandated by the IRS while interpreting new guidelines, so be kind and respectful and remember: they are working for you.

Guy Hatcher: The Legacy Guy – is passionate about helping families plan their legacy. His book, Your Future Reflection: How to Leave a Legacy Beyond Money, is available at amazon.com. Follow him on twitter @guyhatcher or contact him at www.guyhatcher.com

Publication date: January 26, 2015