Don’t Wait Until Next April

Posted on: July 31st, 2014 by Leah Nichaman No Comments

It’s the day after Tax Day! If your taxes were done, yesterday was a day to relax and feel in control. If they aren’t done yet, you can breathe easier since your extension gives you 6 more months (but don’t wait until the last minute in October).

For those of you who for whom taxes are a chore, I promise, next year can be better.

In order for this to happen, my advice is: Don’t wait until the year ends. Track your income and expenses throughout the year. Make it easy by using an account aggregator like Mint (www.mint.com), Yodlee (www.yodlee.com) or ClearCheckbook (www.clearcheckbook.com). These online services download your financial transactions automatically leaving you to simply categorize them. At the end of the year you will be able to generate reports of your income and expenditures by type. You can also download transactions into financial software such as Quicken or into a spreadsheet program such as Excel.

You don’t necessarily need to track every expense, but if you itemize your deductions, some of the most common that you will want to track by type are:

  • Medical expenses
  • Charitable contributions
  • Business expenses
  • Property taxes

Any deposits to your accounts that are not be summarized by a W-2, 1099 or other report will need to be tracked as well. This might include medical insurance reimbursements or other miscellaneous income.

While it is already April 16th, its not too late to go back and get the data beginning January 1, 2013. Take the time now to get it into your tracking system and then enter new income and expenses into your tracking system at least once a month. At the end of the year you will not be chasing around to get your data and your 2014 tax season will be a breeze.