By Jennifer Wake, AFC Financial Education, Financial Readiness
What are three of your favorite things in January?
Mine are kids returning to school, snowstorms, and tax documents.
I’m not kidding. January is the time to start preparing for tax time. At the start of the year, we must do several things to help prepare for tax time. While my kids enjoy their last days of Christmas break, I enjoy closing out our family budget and downloading end-of-the-year statements. Can I get a fist pump from my finance geeks?
There are many strategies to help you be successful at tax time. Here are some of the things I do to prepare for tax time.
I always look at my husband’s December LES (leave and earnings statement) to see how much he made and how much taxes the government withheld. Then I look at my last pay stub (usually, I have downloaded each one) to see my earnings and taxes. Our W-2s will arrive via electronic download in January. This arrival gets me started with my collection of tax documents.
Start collecting your tax documents early. Tax documents will arrive via email notification or in the mail after the first of the year. If they appear in the mail, place them in a file so you have them all together, then go online to change to paperless notifications. Identity thieves can take these end-of-year statements out of mailboxes. If you receive notification via email, go to the website directly (not through an email link) and download the documents onto a flash drive or CD. If you have a program that encrypts files, you can keep the files on your computer using that program. Collecting information is easy, but protecting it takes a little work. Putting tax documents on a flash drive and putting them into a fireproof box will give you peace of mind, knowing your documents are safe.
Next, gather up all charitable contributions. Organizations will send out receipts via email or mail once they finish their accounting for the year. If you have donated items to a drop-off location, make sure you have kept the receipt and noted what you contributed. When my kids were young, I placed outgrown clothing in different bags. That helped me know how much I was donating from each child.
Third, decide how you will do your taxes. You can do your taxes or use a program on your computer or online. You can look for a military base with a VITA (Volunteer Income Tax Assistance) center. Or you can pay for someone else to do them for you. Regardless of your decision, make sure they take your private information security very seriously.
Tax time can be stressful; however, getting organized can decrease stress. Making sure you have everything prepared and securely saved will help you be ready to tackle tax season like a pro. What systems do you use to get prepared for tax time? Which is your favorite system to file your taxes?
Jennifer Wake is an Army wife, mother of three grown children, teacher, and writer. She loves mentoring military spouses, especially chaplain’s spouses who serve sacrificially. Her passions include writing books and blogs, developing training material, networking with women, and quilting. She resides in Bristow, VA, with her wonderful husband and two dogs.