Reflections After Tax Day
April 20, 2012We just got past April 15th, otherwise known as “Tax Day” to many Americans. Actually, it was the 17th this year, but who’s going to let a mere 48 hours change our perception of April 15th? In the days leading up to April 17th , it was impossible for me to go more than a few minutes without being asked a question about taxes, asking someone a question about taxes or seeing a tax piece on the news or online. I felt like I was seeing tax information even while I was asleep.
The problem is that this can be like cramming for a test that you know you should have been studying for much earlier. It’s probably not the best way to go about it. What I’ve learned over the years is that if I wait until April to try to reflect back over the whole prior year, I forget about a few expenses that I could have otherwise deducted and I find myself missing receipts and other information for the ones I do remember.
Of course, most people don’t really want to spend a lot of time thinking about taxes all year round so they put it off until the very last minute. But that’s a recipe for both higher stress and higher tax bills. Here’s what I do to make things as simple, quick and effortless as possible:
1. In the beginning of the year, print out a blank Form 1040 and Schedule A, and a Schedule C if you own a small business.
2. Get a highlighter or a red pen.
3. Circle or highlight any area where you think you may have either an itemized deduction (Schedule A) or a reduction in income (1040 lines 23-37).
4. Get a blank folder and label it 2012 Taxes
5. Any time you incur an expense that you think can even remotely help you reduce your taxable income, put your receipt in your tax folder. Consider a note to yourself explaining how it’s a deductible expense if you don’t think you’ll remember next April. (Trust me, that note has come in handy for me a few times!)
6. Once a month, take a quick look at your highlighted forms and maybe even read the 1040 Instructions for those areas to refresh your memory.
Once I started proactively preparing during the course of the year, I found that spending those few minutes of time paid off by making my tax preparation much easier and my taxes lower. I’m hoping that these quick little steps can help you drive your tax burden just a little bit lower and make you dread tax day a little bit less. Maybe April 15th can even start to seem like just another day.