Albert Einstein is quoted to have famously said: “The hardest thing in the world to understand is the income tax”. And really, for many people, it is the most difficult thing they will have to understand and calculate every year. But even though it can be extremely laborious to go through all those numbers, especially if you weren’t keeping track in the meantime, there are still ways you can make your life easier.
Today we can direct our trust to cleverly developed apps that do most of the calculating for us, but even besides that, there are “old-fashioned” ways of making tax filing easier. Neat record-keeping, charging all expenses on the same card, asking for a helping hand, etc, are all viable techniques that can make this job seem easy as a piece of cake.
Meticulous Record-Keeping
For starters, this tip does not make the whole operation easier in terms of how long it would take but helps when trying to balance out the seats at the end. Record-keeping can be done in various ways, most of which require writing down what your expenses and incomes were on a daily or weekly basis.
Make sure that you also keep in possession any and all sales slips, invoices, credit card receipts, etc. so you can prove that what you wrote down in the checkbook is actually true, if needed.
The Digital Solution
Keeping in touch with modern solutions we can turn our eyes to the many programs developed to help with accounting problems.
Everyone knows Microsoft Excel, of course, but it doesn’t do any calculations on its own besides what you put in and ask it to do and display. Next in line are programs such as the Keep Tax app that can connect with you via the internet and keep track of your expenses and automatically sort out what is deductible. This is a fancy way of getting your tax refunds sorted out during the entire year, instead of having to remember if any minor thing you bought was used for business during the year.
Putting it All on the Same Card
One handy tip for managing your taxes is charging every major expense, or a certain type of expense, on the same credit card. As you will get your monthly or yearly statements from the bank that list the transaction you’ve had over their card you easily find what is where if you put, for example, business deductibles on one card only.
This, of course, has the drawback of meaning you have to keep track of several cards, but even if you use only one some banks will even offer a cash-back at the end of the year, even to the amount of 1-2% of your expenses!
Asking for a Helping Hand
This may seem like a surprise for you - but getting a personal accountant is not that rare. Many people who have a business of their own, or a large number of assets, will find professionals to help them sort things out.
This doesn’t necessarily have to be a full-time accountant working for you, sometimes it can even be a close friend who you’ve called over to see if you’ve missed anything important while filing taxes, but either way it is smart to ask for a second pair of eyes and hands. Two heads are better than one, and when money is concerned - it’s also a time-saver.
Mind the Deadline
Take note that taxes have to be organized and filed to a certain date. For 2021 the IRS has given a starting date on the 21st of February and a deadline on April 15th, and as their system is trying to keep up with a huge number of applicants you should make sure that they don’t have to deny you your tax returns because of an untimely or wrongly filed paperwork.
Remember that filing electronically and giving a direct deposit are the fastest ways to get your tax refunds.
Educate Yourself
The last tip we can give you is to get to know the system. Every successful businessperson and the wealthy individual didn’t become so without having a firm understanding of how the system of taxes works. Educating yourself in due time about that are all the possible things you can deduct from your taxes, or how you can file them on time and as efficiently as possible, are all valuable life skills that we need every year.
There is no point in trying to fool the system, as money is always traceable. Make sure that before you become financially independent you learn from your peers how taxes work, and you will know how to solve at least one yearly obligation that comes to you as an adult. And for those of you who are already in those waters - follow our tips and filing taxes may just become easier than ever.
