Top 5 Tips for Your Most Organized Tax Year Yet
So, you filed your 2022 taxes, now what? Breathing a sigh of relief is usually a great first step. Did you spend hours hunting down your tax documents, filling out your tax organizer, and hoping you didn’t forget any important documents or notes? If you find yourself vowing to be more organized next year, this guide is for you.
Identify your pain points.
Make a note of the pain points you experienced this past tax year. Was it difficult finding your tax information – some of it was stored online, some of it came in the mail, some of it was in your email, etc.? Did you find yourself hunting down charitable receipts? Did you wonder if there were ways to be more tax-efficient? Were you surprised by the results of your tax refund or taxes due? Identifying your particular pain points will help you prioritize where to improve your process.
Pay your quarterly estimated tax payments, if applicable.
If you are paying quarterly estimated tax payments, do yourself a favor and consider scheduling your payments in advance.
- Federal Estimates can be scheduled up to 365 days in advance here at https://www.irs.gov/payments/eftps-the-electronic-federal-tax-payment-system
- Illinois Estimates can be scheduled and paid here at https://mytax.illinois.gov/_/#1
- Set a reminder – create a calendar reminder 2 weeks in advance of your payment dates to ensure that you have adequate funds to cover your estimated tax payments.
Meet with your financial planner to review your financial plan for the current year.
Schedule a time to meet with your advisor to discuss your financial expectations for the year. Your financial planner can help you identify tax-efficient ways to accomplish your goals– such as charitable giving, saving for your kids’ college, medical expenses, saving for retirement, and many more.
If you are in retirement or are taking distributions from your accounts, your advisor will help you identify an appropriate distribution strategy given your personal financial situation.
Do you anticipate any life changes this year? Examples of changing circumstances are changing jobs, moving, having a child, sending a child off to college, retiring, changing income expectations, among many others. Your advisor can help you evaluate how those changes may impact your tax planning and can help coordinate with your tax planner to address whether any changes are needed to your tax plan.
Organization: Store your information throughout the year in one location.
Have you ever watched a squirrel skitter around frantically digging for the nuts it stored for winter? According to the Smithsonian, squirrels only find about 15% of the nuts they bury. When it comes to tax information, I think we can all agree that finding 15% of our necessary information is not a successful ratio.
The moral of the story is… don’t be a squirrel. Store your documents and notes as they occur in a secure and centralized location to make retrieval at tax time a no-brainer.
There are so many great options for document and note storage. If you like paper, for example, you can simply print out your information and file it in a trusty manilla folder. If you like to have your files digitized, you can scan your documents and upload them to your trusted cloud or use the Vault in the Tenet Portal. The key is to do what is easiest for you to follow through with throughout the year.
Some examples of what to store throughout the year:
- Receipts from Charitable Donations – Make a note of how the gift was donated. Was it funded through a Qualified Charitable Donation from your IRA, through cash, a Donor-Advised Fund, or in-kind?
- College Education Expenses
- Childcare Receipts
- Medical Expense Information
- A note with your quarterly tax payments made
- Property Tax Receipt
- All tax-reporting documents that you receive at tax-time such as W-2s, 1099s, K-1s, etc.
Mid-Year Tax Planning Review
Make a note to check in with your Financial Advisor and Tax Planner mid-year to make sure you are on track and that your financial plan is tax optimized. If you have any unanticipated life changes or changes to income, make sure to re-visit your situation with your financial advisor and tax planner to see if you should do anything differently. While the dust settles on the 2022 tax year, now is the time to set yourself up for an efficient and organized 2023. Future you will thank you.
At Tenet, our planners help families navigate the complexities of financial planning throughout each life stage. It is our privilege to be a trusted financial partner to the families we serve. We invite you to reach out to us to learn more about our unique approach to financial planning and wealth management.
The information provided in this communication was sourced by Tenet Wealth Partners through public information and public channels and is in no way proprietary to Tenet Wealth Partners, nor is the information provided Tenet Wealth Partner’s position, recommendation or investment advice. This material is provided for informational/educational purposes only. This material is not intended to constitute legal, tax, investment or financial advice. Registered Representatives of Sanctuary Securities Inc. and Investment Advisor Representatives of Sanctuary Advisors, LLC. Securities offered through Sanctuary Securities, Inc., Member FINRA, SIPC. Advisory services offered through Sanctuary Advisors, LLC., an SEC Registered Investment Advisor. Tenet Wealth Partners is a DBA of Sanctuary Securities, Inc. and Sanctuary Advisors, LLC.