Tax Advice for People Who Hate Doing Their Taxes, Part II of Infinity

This post is for anyone who thinks tax returns are modern torture devices: very painful and request waaayyy too much information.

Legalese, finance, minutiae and numbers aren’t my thing, either. And I was a CPA in public accounting for 5 years.

So take heart. If I can learn this stuff, you can, too.

Like an anthropologist returning from a remote village, I’m here to teach you a secret:

A tax organizer can help more than you think!

**

A tax organizer is a thorough, insomnia-producing questionnaire about your tax-related activities for the year.

In public accounting, we sent one to every client because the horrible things were so useful.

The good news is you don’t have to complete the organizer to benefit from it. That’s my kind of accounting!

You will benefit even if you only use it as a guide to:

  • Consider all sources of potential income and expense for the year.
    • Review the whole thing and you can be more confident you “covered all your bases.”
  • Make more distinctions between types of income and expenses. And understand your income tax return(s) more as a result.
    • That will, in turn, give you a greater sense of competence and self-efficacy.
  • Arrange and order your tax documents logically.
    • If you’re like me, paperwork ends up in the junk drawer. Under the random stack of receipts and next to that bag of pennies you’ll never take time to delicately maneuver into those annoying bank sleeves for deposit.
  • Understand more tax “stuff” (forms, terms, etc.) so you won’t have the same questions next year.
    • That means you’ll get more efficient at your tax season to-dos.
      • Hooray! Even less time on taxes!

If you see any item on the organizer that confuses to you, poke around the IRS Interactive Tax Assistant (ITA) to learn more. See my post about the ITA here.

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Click here for a sample Tax Organizer from Commerce Clearing House (CCH), a well-respected accounting software company.

Section 1 is only necessary if you’re sending the document to a tax preparer.

Section 2 is useful if you aren’t sure whether or not to claim a dependent. Complete the section thoroughly then complete the ITA’s module: Whom May I Claim as a Dependent? to clarify whether or not you can.

Review the 22 “Yes / No” questions on pages 1 and 2. Other than question #16, a “yes” answer flags items that might require further examination. If you identify an item or transaction for your own review, go to the ITA and look for relevant modules.

Each subsequent section requests dollar amounts and indicates the forms you should have received for that income or expense. For example, Section 3. Wage, Salary Income specifies “Attach W-2s.” Section 7. Property Sold requests your “1099-S and closting statements.”

Some sections (e.g., 26 and on) will only apply if you’re returning an organizer to a tax preparer.

**

A tax organizer can help you understand more about your income tax return(s) and the taxable activities that are reported on it.

Download and review one, and supplement your learning with the ITA.

Thanks for reading and stay tuned!!

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