As we move further into the year, there’s no doubt you’re receiving multiple tax documents from a variety of places. You’re probably wondering if there is a better way to manage your taxes so you don’t spend so much time on them. According to the IRS, the average person spends 22 hours assembling and completing their tax returns, and 32 hours if you have to file a Schedule C. Here are a few tips to get your 2016 tax calendar on the right track:
- Start a file for 2016 as soon as the first tax document arrives. Make different folder labels and categorize W2s and 1099s, business receipts, charitable donations, and end of year financial statements so they are easy to access at filing time. Then do the same with all incoming 2016 statements so April 15th will be a breeze.
- Set up a calendar. If your taxes consist of business expenses, tip income, household employer payments, or other tax situations that aren’t included with a W2, consider putting important dates such as your quarterly filings into a calendar. By getting important dates from publication 509, you can make sure you won’t get behind on quarterly payments again.
- File a new W4. It’s a good idea to periodically review tax withholding instructions used by your employer. Consider increasing your withholding if you refinanced and have a lower interest payment on your mortgage, or if your children are no longer dependents. Consider lowering your withholding if you have a new child or if you’re expecting significant increases in your deductions. The IRS has a withholding calculator to help you evaluate your situation. Access it here: IRS Withholding Calculator
- Use your Flexible Spending Account (FSA). If you have an unused balance from last year, make sure you turn in those medical receipts for reimbursement. Many plans allow until March 15th to claim medical expenses against the previous year’s account. If your employer doesn’t offer this option, check to see if they allow a $500 rollover so you can plan your expenses accordingly.
You can scan and keep your statements organized digitally, as well. Regardless of which method you choose, you can cut down on tax-related stress by taking some time on a regular basis for tax-planning.