I’ll admit it. I’m one of those people who wait until the last minute to complete and file my taxes. It makes my family nervous, but it works for me, and it works for me because I have a method to my madness.
All year long, when I have anything that I believe will be even remotely related to filing my taxes, I drop it into my “tax file.” Then when the time comes to take care of our taxes, I take an afternoon, sort it all out, and complete my forms then e-file. I keep what is relevant to the filing each year, and shred the rest. By waiting, I’ve also gained a little insight into any issues other filers may have encountered, or problems with e-filing programs that may impact my reporting. Now, I know there are people out there that are much more organized than me. They keep an up-to-date file and they organize information every month. Give those people a pat on the back. They are tax organization superstars and accountants love them!
But the rest of us – we just need to make sure we have a method that works according to our individual idiosyncrasies. It’s not about perfection, just correctness so we don’t end up in that area that may induce the dreaded audit.
However, I encourage you to make this time about more than just your taxes this year. Take a little extra time when you’re preparing to file your taxes and make sure you know where all the rest of your important documents are – insurance policies, property deeds, vehicle registrations, wills, trust documents and beneficiary information, living wills or medical POAs and related health care information, funeral or burial information, military discharge papers, proof of citizenship if applicable, account statements and other assets. Make sure you have any valuable information organized, and share with your family how to access these important documents. One easy way is by organizing all of this into a “Facts of my Life” document that can be updated each year and is available to your family if necessary. A template for this type of document is available upon request.
And in this age of technology, make sure you include your digital assets. It’s easy to leave this intellectual capital behind. People don’t necessarily think about the items or places they access online as “property”. These “intellectual capital items” may be documents stored in the cloud; photo libraries; a blog; online bank access; a website; Facebook or Linkedin pages that may be pertinent to you and/or your business. Compile a list of these important assets with a secured compilation of passwords that your family knows how to access if necessary. Your inventory should have full information about each item including website addresses, log-in or access instructions, and any security questions and answers. Once you create this inventory, it’s important to keep it updated.
It may sound like a lot of work, but it’s not as daunting as it seems. Most people have an idea in their head of where these things reside. You just need to take the time to pull it all together. And if you take the time to do it once, then it’s easy to just take a few minutes each year at tax time and do a quick update. It’s worth it for your peace of mind and your family’s.
If you have questions or comments about this article, you may contact Melody Lowe at firstname.lastname@example.org
Securities offered through Sigma Financial Corporation. Member FINRA/SIPC. Investment advisory services offered through Sigma Planning Corporation, a Registered Investment Advisor. Financial Partners, Inc. is an independent of SFC &SPC.