I’m a Financial Advisor—Here’s 3 Tips to Get Organized for Tax Season

Tax season happens every year, yet it somehow always sneaks up on us. Tax season isn’t, in fact, a seasonal event. You can organize and prepare for taxes all year round so that when those deadlines arrive, you’ll be first in line to call it done.

Key Takeaways

• Prepare for tax season year-round to ensure a smoother and less stressful filing process.
• Work with your tax professional to develop a clear checklist covering income, deductions, credits, and other relevant financial details. Keep it updated to avoid last-minute scrambling.
• Upload and organize your tax-related documents into a secure digital system (like Box.com) throughout the year, sorted by categories from your checklist.
• Partner with a CPA and CFP who focus on proactive tax strategy to help minimize your tax burden year-round rather than just preparing your return at the last minute.

What I’m Telling My Clients

1. Work From a Check List

Work with a tax professional who provides a clear checklist of what you’ll need to hand over when it’s tax time. With that same checklist in mind, make sure you’re keeping track of your documents so you’re not caught off guard the next time tax season rolls around. 

With a clear checklist, you won’t have to work from memory–and you won’t be reinventing the wheel each year. Your checklist should be broken down into buckets like:

• Income (W2 wages, equity compensation, retirement plan withdrawals, real estate sales, interest received from your savings, income from your investments, etc.)
• Deductions (tax-advantaged retirement contributions, donations, interest payments like your mortgage, etc.)
• Credits (education and childcare expenses, energy improvements, estimated taxes, etc.)
• Other (gifts, rental property, business ownership, etc.)

2. Use a Digital Filing System

Throughout the year, upload relevant documents for each of your accounts/actions into a secure digital filing system. (We like Box.com at Hendershott Wealth Management.) 

For simplicity’s sake, you can start a folder labeled “2024 Tax Docs” (or whatever year you’re preparing for). 

Tip

Keep your folders organized into the same buckets as your checklist so you know exactly where all the relevant documents are.

Not only will you skip scouring your email and web portals for donation receipts at tax time, but when you file things appropriately throughout the year, you’ll also help avoid the number one issue that leads to inaccurate tax returns: not giving all of the relevant data to your CPA. 

3. Work With Tax Savvy Professionals

Good financial oversight means knowing what you’ll owe (or be owed) come tax time.

Working with a CPA and CFP who focus on tax strategy, which is proactive, rather than just tax preparation, which is reactive, can help you save on your taxes throughout the year. They can help you understand and strategize around various topics you might not be as familiar with, such as minimizing capital gains taxes, understanding contribution limits, the Tax Cuts and Jobs Act (TCJA), and more. 

Warning

 If you choose to work with a financial advisor, do your research to make sure they understand taxes.

The Bottom Line

Benjamin Franklin wasn’t wrong when he said, “Nothing is certain except death and taxes.”

While we can’t predict the circumstances of our passing, we can bring predictability to our taxes. With organization, preparation, and a team of financial professionals you trust, your tax bill can be minimized, and your tax prep stress can quickly become a thing of the past.