My daddy used to say, “There are only 2 things you have to do until you die, breathe & pay Uncle Sam”.
Well ladies, it’s that time of year again. You know…The time of year when “Uncle Sam” wants to know just how much you made, how much you spent makin’ it, & how he wants to divvy out the left overs.
Taxes…Love ‘em or hate ‘em, one things for certain…We all gotta do ‘em. And…It’s all so overwhelming.
Is it just me or do y’all feel like Dorthy in the Wizard of Oz, as tax time approaches? Y’all know the scene…The one where the tornado music starts playing really fast, the mean old neighbor lady has Todo in her bicycle basket, her evil grin glaring & cackling, as she’s going around & around into that funnel.
It’s enough to make me dread seeing my accountant in June at the local market, not to mention in her office come April.
It’s the one thing everyone of us dreads. You can be little miss sunshine 51 weeks out of the year…But that 1 week before April 15th…I do believe it’s worse than child birth.
A few years back, I got tired of it. I mean really tired of it. The scrambling to find receipts, deciding if this or that was tax deductible or not. Only to go back on April 12th to find something else that “might” help us.
I knew there had to be a better way. A way, that didn’t take up two weeks of my life, or at least not all at once.
Through the years I’ve tried lots of ways of keeping up with our expenses. All in hopes that it would be easier for me to prove to Uncle Sam, that yes indeed it does take money to make money.
Our accountant gave us the best advice for doing this. Oh! Boy!…Does she know how to “ease” the pain of the process! So I’d really like to share some of that with you.
There is lots of technology out there to make this “easier”, but as we go along, y’all will see, well…me & technology…we don’t get along so well.
I can’t promise this will make you look forward to tax time, but it will make the process a little less frustrating.
My way is super low-tech, making set up easy & maintenance is a once a month thing, (I try to do mine on bill payin’ day). Easy Peasy!
What You’ll Need
- A 13 pocket accordion folder (preferably plastic)
- An 8 X 11 calendar
- Computer & printer
- 12 manilla folders (the ones with the closed sides)
- 12 6X9 envelopes
- A 2 gallon zip loc bag
- A plastic storage bin
- Label maker (optional – a Sharpie works great)
Note: Our CPA advises that we keep our records for 7 years, which means you could prep 84 manilla folders & 84 6X9 envelopes & 7 zipper bags, that way you have your system set up & you’re now prepared for years to come. Once you get to year 8 you simply empty the folders, envelopes, & zipper bag from year 1, destroy the year’s records, & reuse them for year 8.
What To Do
1. First, label each pocket of your accordion folder January to December. Due to our extensive travel schedule, I opted for a plastic reusable accordion folder. It makes it easy to drop it into its place at home, it’s easy to pack when it’s time to go again, & it’s durable so I can reuse it year after year. I like to leave the first pocket of the accordion folder unlabeled to store current bills & reminders.
2. You’ll also want to go ahead & label the 6X9 envelopes & each of your manilla folders January through December. Place each 6X9 envelope into its corresponding manilla folder. Place these into the zipper bag & put it to the side for the time being.
3. Next, on your computer, you can make a list of ALL of your monthly expenses (ex. truck payment., car payment., tools, cell phone etc. We also add things like tithes, all of our insurances, prescriptions, & milage for all of our vehicles). Add a couple of “blank” lines for the extra little things that may pop up through the year.
4. Now print this list on the back of each month of your calendar (I printed mine here). You could also add due dates to each month as a reminder. I like to write the city & job name in the dates of each calendar (this helps me to “verify” my days away from home each year). I place each calendar in it’s corresponding pocket. As you pay bills & collect receipts, just drop them in the accordion folder for their month. This calendar is the heart of my tax prep
Now for the part I hate…
5. Within the first week of the following month, separate your receipts & bills to fit the categories you’ve created on the back of your calendar. I tally the amounts & put that amount on its corresponding line. As I sort receipts & expenses for the various categories, I tally each group for the month, & fill in the blanks. I paper clip each stack together with a sticky note category label. Once you’re done, put everything back into that months pocket.
For example; I do January’s receipts by the end of the first week in February. I try to do this monthly, all year, so that when April rolls around I’m not trying to get all 12 months done at once.
6. Now, as April 17th is approaching, all you have to do is pull out your 12 calendar pages, tally all the lines for each category, & BOOM! you’re ready to go see your CPA.
7. Once you’ve finished with your CPA, empty each pocket of your accordion folder into that months’ coordinating manilla folder & the receipts into the 6X9 envelopes, put the envelope back into the manilla folders.
8. Finally, label your zipper bag with the year, put all 12 manilla folders into the bag, close it, & drop it into your storage box labeled “TAXES”.
That’s all there is to it folks. Once you’ve got a system in place & a place to keep it all together, there’s no need to worry about where everything is or how it’s done! And if that dreaded audit letter ever comes in the mail, you’ll be confident in knowing exactly where everything you need is (which by the way is the reason I keep & do hard copies…Uncle Sam wants originals not digital). Our accountant says we only have to keep records for 7 years, but I keep ours for 10 (just in case). I do however, keep all of our returns (26 years worth so far).
As the years have gone by I recycle my manilla folders, envelopes, & plastic bags. For us it has become a cycle of pull out the oldest & replace it with this years.
I think it’s pretty neat to pull out our returns from time to time & see how far we’ve come through the years.
I’d love to know how you make tax time less stressful!