The following tips will help you get organized and stay organized so you’ll know where everything is when it comes time to prepare for your taxes.
#1 Separate your checking accounts.
You should have your business and personal accounts separate for accounting reasons. For example, my husband travels a great deal for business, and while most of the expenses are reimbursed, some are not. This means we need to keep track of those expenses for tax deductions.
For this reason, we make sure he has a separate account and allowance for non-reimbursed travel expenses. (Reimbursed expenses go on a credit card). He uses a debit card with this account, so that every purchase is itemized on the bank statements. This way, he does not have to keep track of receipts. He uses the same bank account for dry-cleaning his work clothes, purchasing magazines and periodicals for work, and buying lunch for co-workers and employees.
#2 Go through your bank statements each month.
If you go through your bank statements when they come in, you can make notes regarding what each item was for. (I like to color code my statements with highlighters.) These itemized bank statements can be used at the end of the year for your itemized deductions.
#3 Get in the habit of filing your bills and paperwork.
You can start by filing all of the papers in your home that have accumulated in the last 4 months. If you file all of your bill payments, donation receipts, and medical payments as you receive them, then you will have everything at hand when it comes time to prepare next year’s taxes.
I have been a certified tightwad striving for financial freedom since I became pregnant with my first child — and I decided to find a way to stay home with him full-time. I enjoy sharing my personal experiences in my journey back to financial health and planning for a future — which will include sending 2 kids to college and early retirement.