Are You Ready For Tax Season?

Yes, my life really is so boring that I get excited enough to wahoo over taxes. I know.

Jan 11, 2012 at 5:00pm | Leave a comment

The first week in January is when I start thinking about taxes.

I’m not kidding.

See, the thing is, like a lot of independent contractors, doing my taxes is kind of a nightmare. So much so, in fact, that I pay a very nice man to do it for me1, but unfortunately I’m not allowed to waltz into his office, unleash a blizzard of paper, and leave again. I have to be organized.

The sooner this is done, the better, because my very nice accountant is also very popular, which means that if I wait too long, he won’t have time for me. So, I get my end of the deal together and then wait for all my tax declarations from clients to come in, in order to have a nice package ready to turn over to him in mid-February.

Being organized means he likes me, too, because it doesn’t take him very long to do my taxes. But it does require, you know. Organizing.

So, let’s have a little chat about how to get from this:

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To this:

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(Living room floor optional, I just like room to spread out when I do this.)

Despite the fact that I am pretty together when it comes to most things, I don’t have a system for controlling receipts, check stubs, and other things over the course of the year. I lob it all into the front pocket of my organizer thingie and deal with it in the first week of January. It really only takes me an hour to pull together my documentation, versus fussing every time I have to file a receipt, so this works for me. Your mileage may vary!

But I think this is evidence that if you’re currently staring at a pile of receipts in despair and pledging to be more organized about it this year, you really don’t need to fret. And if you haven’t even gotten to the point of staring at a pile of receipts in despair because, hello, it’s the first week of January, well, you still don’t need to fret.

Yet.

So, I take my big snarled mess of paper and organize it in piles according to the classifications I use for different kinds of expenses, like “mail” and “Internet.” I tend to err on the side of caution and let my accountant figure out how to classify things for tax purposes, since he does this for a living and I do it for fun once a year. And then I open up a spreadsheet and enter all those receipts, so that I can file them away in neat bundles by subject as I go. I rubber band them and everything, it’s very sexy2.

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For cross-referencing purposes, I also check what I jokingly call my “master ledger,” which is that binder buried under all that paper in the first picture. I use it to record every transaction I make over the course of the year and make sure to note what kind of transaction it is and whether it applies to taxes in some way – either I made money or had to pay someone money and must tell my accountant all about it, basically.

I find these notes immensely helpful when I’m sitting down to prep my documents for my accountant and really cannot recommend doing this highly enough. Protip: Don’t be cryptic. A note like “yes” in the line for “taxes?” is not helpful. “Yes – travel” is much more useful.

I hear there is software for doing this! And that is what all the cool kids do!3 But, despite being constantly on the computer, I don’t use accounting software. I know, it’s weird. It’s just easier for me to write things down. Anyway, so I go through the year on there to check for anything I might have missed, enter that into my spreadsheet, and...

Bam. I’m done. Now I just need to wait for 1099s, which means the ball is thoroughly in someone else’s court right now.

WAHOO!

Yes, my life really is so boring that I get excited enough to wahoo over taxes. I know.


 

1. This is also because I am completely incompetent at math and managed to mess up my taxes every year. I decided it was worth paying someone to save me from myself, and, incidentally, save me a small bundle of money every year. Yay accountants. Return

2. Really I just deeply crave order, so seeing a tangled mess of paper turn into a neatly closed file makes me quiver inside like a jelly. Return

3. I have even heard that this software basically does what I have just explained for you, but you know what, you still have to organize the receipts anyway, and I prefer to enter things directly from the receipt just in case a mistake was made somewhere. Return