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Getting Ready for Tax Season: Tips for Organizing Your Finances

tax season tips

Tax season can be a stressful time of year for many, especially if you haven't kept your finances organized throughout the year. Fortunately, with a little advanced planning and preparation, you can make the process much easier. Here are some tips on how to organize your finances (for tax season and beyond) from the military money professionals with AAFMAA Wealth Management & Trust LLC (AWM&T).


How to Organize Your Finances (for Tax Season and Beyond)


Stay Organized by Using Filing Cabinets

One of the simplest and most effective ways to keep your finances organized is by using a filing cabinet. Keep important documents, such as bank statements, receipts, donation records, and bills, in one place. This will make it much easier to find what you need when tax season rolls around.

Create a Budget

Improve your financial strategy by staying on top of your cash flow to clarify how much money you have coming in and going out each month. Create a budget by listing your income streams and expenses, both fixed (such as a mortgage or car payment) and variable (such as groceries and travel).

Put Each Year's Documents in the Same Place

Unless you have a special circumstance, the IRS recommends saving tax documents for three years after you’ve filed them. To make it easy to find your tax documents from previous years, put them all together in a separate folder in your filing cabinet or a box labeled with the year. By doing this, you'll be able to quickly find the documents you need if you're audited or need to reference them for any other reason.

How to Prepare for Tax Season

Keep Accurate Records Throughout the Year

Although it may take time now, one of the best things you can do to prepare for tax season is to keep accurate records throughout the year. This includes keeping track of all your income and expenses, as well as any receipts or other documentation. By doing this, you'll be able to easily fill out your tax return when the time comes. You can utilize a spreadsheet in Excel or Google Sheets, or use software like QuickBooks or Mint to track your finances automatically.

Keep a Tax Savings Account

A tax savings account is a separate account where you can set aside money throughout the year to cover your anticipated tax bill. By doing this, you're less likely to be caught off-guard by a large tax bill and you'll be able to pay it off without incurring any penalties.

If you’re currently working, you may want to speak to your Human Resources department about the best tax withholding strategy for your personal finances. The IRS provides a complimentary Tax Withholding Estimator to establish how your refund, take-home pay, or tax due, are affected by your withholding amount.

Understand Tax Laws

Finally, it's important to understand tax laws and how they apply to you. This includes knowing which deductions and credits you're eligible for and how to claim them. If you're not sure where to start, there are many resources available online or you can consult a tax professional. Keep in mind, there are also tax resources specifically for military servicemembers and Veterans.

Achieve Financial Confidence with AWM&T

If you're a Veteran or military family looking for financial solutions, we can help. AWM&T specializes in serving the unique financial needs of the military community, and we can assist you as you prepare for tax season. Give us a call at 1-910-307-3500 or Speak to a Professional today.

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