If you are one of those individuals who gets nervous around tax time, you are not alone. Thousands of people get anxious, put it off till the last minute, and eventually miss the deadline. But there’s a simpler way to get everything done. If you are wondering how to stay on top of your taxes – and do it with ease – here’s the secret: Organization and documentation.
A significant part of that anxiety around taxes has got little to do with the actual payment and more to do with the expected paperwork. To help it make it easy for you, here’s a checklist of four things to do that will enable you to pay your taxes with the utmost ease.
1. Take note of your income
Document your income when you receive it. It doesn’t matter from where you get it, the important thing is to keep evidence of it. Take a printout or photocopy and file it. In fact, keep a separate folder for all your tax-related documentation and keep your income receipt in it. Pro Tip: Have a folder dedicated to tax documentation on your computer too.
If you are a freelancer, make sure that you keep all proofs of income, including, the amount, payment date, name of the client, and the nature of the work.
2. Save your receipts
It’s quite simple. Whenever you pay for something, keep its receipt in the folder we mentioned earlier. There’s a good chance that some of the bills may fade, so take care to scan them. And if you are working from home, make sure that you save all your utility bills too.
3. Document previous tax returns
Filing returns becomes easy when you have documentation of your previous tax payments. They will be handy in case you have to amend your returns. Ensure that you keep your returns for at least three years.
4. Aim for IRS compliance
What you want is for the IRS to know that you are compliant. If you have any unfiled returns, you won’t qualify for the IRS Fresh Start Initiative.
