Finance

How to Organize Your Finances and Prepare for Tax Season

Tax Day is quickly approaching, and given the uncertainty of our economy right now, a refund sounds really nice, doesn’t it? I’m sure you all heard the news, but Tax Day has actually been moved from April 15 to July 15. I’m still filing on time because a. I’m ready and b. I’ll feel better knowing it’s done. If you own a business or side-hustle, want to maximize your tax refund, are planning to itemize deductions and don’t have everything organized, now’s the time to get started.

Trust me when I say that you should avoid filing the day before taxes are due. I’ve been there and everything felt last-minute and extremely stressful.

Finding someone I trusted to help me finish my taxes virtually was key, as now it’s a must as it’s the only way to work with a professional while keeping our families, friends, and communities safe. I’m partnering with H&R Block to share how I organize my finances and prepare for tax season with Tax Pro Go – the best way to do your taxes as safely as possible (with a professional) from the comfort of your own home. You can even use your mobile device to upload your tax documents and a tax pro will prepare your return virtually, allowing you more time to do the things you want to do. We have an exclusive offer for you – use the code 21862 to get $20 off the cost of getting your taxes done with Tax Pro Go℠ and we’re giving two of you each a Tax Pro Go® experience valued at $350! Details to enter can be found at the bottom this post.

Staying organized and working with a professional are the two things everyone can do to make tax season (and Tax Day) as stress-free as possible. I’m going to talk about how to prepare for tax season, some mistakes I’ve made over the years, and the fastest and easiest way to file your taxes from the comfort of your own home.

 

Track Your Spending and Saving Each Month

This is one of the most important things you will ever do for your financial wellbeing. Know what you’re spending, what you’re earning, come up with a savings plan, and look over everything each month. I always made it a habit to check my credit card statement online every one-two weeks. This helped me stay in check and on top of my budget, so I know when to curb spending. Knowing where I was at (even when I was just starting out and basically breaking even if not dipping into what savings I had) helped me make sure I never spent more than I could or should.

 

Stay Organized

Figure out a system that works for you. Some prefer a pen and paper while others like everything online. I love a paper calendar or note pad, but when it comes to finances, I need a modern-day spreadsheet. Being able to add things up with a single click and having easy access on my computer via Google Spreadsheets makes it all feel so organized.  I track all of my income so for me, that’s my salary (which is set every month), and then my side-hustle, which varies month-to-month.

When the 1099s start rolling in, I put them in my tax folder in my desk drawer so nothing gets lost. Learned that lesson the hard way a few years ago when I lost a couple 1099s and had to request new ones. I recommend scanning everything so you have a digital copy and the originals, too.

This tax prep checklist is an excellent resource, as is this small business tax-prep checklist.

 

Write Off Business Expenses

You can write off any essential business expenses. For me, that’s my new digital camera and money spent on maintaining or developing my website: the server, design updates, and purchasing my domain each year. If you work from home and have a dedicated home office, a portion of your rent (or mortgage) and internet can be written off, too. A financial professional – like an H&R Block tax pro – can help you determine what you’re able to write off.

 

Keep Accurate Records of Your Income

If you work full-time for a company, it is likely that you’ll receive a W2, which is all you need to show your income. If you have a side-job or projects or any other income like I do, you will need to keep track of that as well. Any time I sign a contract with a brand, I put the amount I’ll be paid in my spreadsheet. Payments come in anywhere between 30-90 days after a project is complete, so I do this to know what’s coming in, what I am owed, and what has been paid.

Something to note: You will only receive a 1099 if you were paid over $600 by a client (in my case, usually a brand partner). You are responsible for reporting all income earned, even if you aren’t given a 1099.

 

Plan Ahead: Put a % Away and Pay Your Quarterlies

Years and years ago when I was newer to all of this, I didn’t really track anything and had to pay a “surprise” $5000 more than I had anticipated. There were a lot of tears and it was a very stressful time. The good news is that I never made that mistake again. When you work for yourself, there can still be surprise tax bills after paying those quarterlies, so be sure to put a set percentage away.

 

Contribute to Your IRA

As someone who waited to start an IRA in my 30s, I can tell you that it’s never too late to start. You can put money in your IRA up until Tax Day (and that amount will count for last year) so once April 16 rolls around, your chance to contribute for the previous year will have officially come to an end.

I am now four years into having a SEP. I would recommend sitting down with a planner or doing a little research and coming up with an investment plan that works for you. It’s so important to save for retirement but it’s also important to make sure you have an emergency fund, and that you’re saving for your more immediate future plans (owning a home, car, investments, etc.)

The last few years, I put away about 15% of my earnings in retirement, but it was a number that was decided at the end of the year vs pulling something out each month. We have seen very steady growth, but not knowing for certain how much we’ll make is reason enough to be careful and see what’s left at the end of the year.

 

Don’t File Your Taxes Until You’re 100% Ready

Here is a checklist of everything you need to file your taxes. If you’re waiting on anything or are missing information, do not rush the process. Make sure you have everything you need in order to file.

 

Hire a Professional (and File Online)

It’s 2020. We live in an age of busy, and even if you do have a decent amount of down-time, do you really want to spend it at a tax office? I doubt that you do. As a working mom with a side hustle (you know, my blog) free time is something I don’t have a lot of. I hate to admit this, but math is not my thing, and I would not trust myself to file my taxes correctly. I’ve always relied on someone to help with my taxes and this has been the best experience by far when it comes to filing my personal return.

Filing virtually with H&R Block Tax Pro Go® is the easiest and most efficient way to file your taxes without walking into an office. The process is as simple as it gets. Just gather your documents, upload them (you can do this via your phone!) to H&R Block’s online portal, and a certified tax pro will handle the rest.

While that’s being done for you, you can relax in the comfort of your own home (in leggings!) knowing that a pro is making sure everything’s done correctly.  Tax Pro Go® allowed me to get back to my weekend time with my family, reading my new book club book during Margot’s nap time, and a little (very little) much-needed relaxation. It was as stress-free as can possibly be, and going into it prepared, with all of the tips I shared here, made the entire process a breeze.

 

 

Make Notes and Prepare for Next Year

Even with all these tips, preparing for taxes can seem like a daunting experience. Make notes for next year and start preparing early. Set a reminder on the last day of each month to go through statements, business credit cards (if applicable) and what’s coming in. Track those amounts monthly and you’ll find that by the time you’re ready to file next year, you’re a lot more prepared.

 

And now, a special offer and $350 giveaway!

Use the code 21862 to get $20 off the cost of getting your taxes done with Tax Pro Go℠!  Just give your tax pro the code when your taxes are done and you’re ready to pay.

I’m also excited to give two of you a Tax Pro Go® experience, valued at $350! The codes expire 4/10/2020, so both winners should get started in Tax Pro Go before April 10, if not sooner.

To enter: Leave a comment telling me something you’ll do with the time you save working with H&R Block.

Deadline: You have until April 1 at 11:59PM CST to enter.

The winner will be announced in the comments here, so check back on April 2!

This post was sponsored by H&R Block. All opinions are my own.