A Guide To Getting Ready For Your Tax Return

Another year has come to an end and that means it will soon be time to file your taxes.  It may not be the most exciting thing that the new year brings, but it is a necessary evil nonetheless.  However, tax preparation does not have to be dreadful event that most people believe it to be, so long as you are properly prepared.  One of the best things you can do, and this is the same thing I ask of all of my clients, is to be organized.  Not only will this help you in knowing that you have everything that is going to be needed, but it will also help the person who is preparing the tax return do so in the quickest and most efficient manner.  What does that do for you?  Simply put, it makes the process a heck of a lot shorter from start to finish and you will get any refund much quicker (especially when combined with e-filing and direct deposit).  To make things a bit easier on you, as well as your tax preparer, here are a few simple techniques from a tax pro to get yourself ready:


    • Take an envelope or folder and mark it “Tax Documents” to house all of the records you will use when filing your 1040
    • Make a list of all of the interest-bearing accounts you have (including checking, savings, & certificates of deposit).  Using last year’s 1040 will give you a lot of help in doing this.
    • Add all of your brokerage accounts to that list
    • Also include all lenders whom you paid mortgage interest to and all counties/taxing authorities to whom you paid real estate taxes to
    • Make a separate list of all of the partnerships or S-corporations that you have an interest in
    • Each time you receive a form K-1, 1099-Int, 1099-Div, 1099-R (Retirement disbursement statement), 1098-E, or tax statement cross off the name of the payee from the list until they are all marked as received.
    • Start to gather all of the information related to stock or mutual fund sales you made during the year as many brokerages do not have records of purchase prices or dates for holdings that were transferred in from other brokerage accounts
    • Get all of the information together related to any rental properties you may own: rent receipts, utility bills, mortgage statements, real estate taxes, repair invoices, insurance bills, etc.
    • Pull all of the receipts you plan to use when filing your taxes, including but not limited to: charitable donations of cash or goods, unreimbursed business expenses (gas, tolls, meals, travel, supplies, etc.), education expenses (and educator expenses if you are a qualified educator), child-care costs, documented moving or job search expenses, medical expenses, medical insurance premiums, etc.
    • Call any pharmacies you use and ask for an annual account summary for the year outlining all of your prescription costs.
    • Pull any receipts for large purchases made during the year, which may include automobiles, appliances or other big-ticket items.  You may be better suited taking your actual sales tax paid on these purchases rather than the generally calculated amount if you itemize (your tax preparer will know which one can be used)
    • Keep the folder on your desk at all times as a reminder to keep organized and not to wait until the last second to bring your documents to your tax preparer to file your taxes.


Understand that this is a very generic list, and everything may not apply to your individual tax situation or you may have a much more complicated tax situation.  In any case, this is just something to help get you started on the right path in filing your tax return, and not making the mistakes that many taxpayers make: waiting until the last second to file, or not being prepared and losing out on deductions due to missing or incomplete information from lack of planning and organization.  While you may benefit by requesting an extension to the filing deadline, keep in mind that you will still be responsible to pay interest on any tax liability you may have when everything is said and done.


In what ways do you get everything orderly for having your tax return prepared?  Or, do you just hand over a box/folder/stack of papers and have your tax preparer sort through everything?

  • Hunter

    Timely article Eric, nice work. I do taxes together with my wife. However, our definition of being prepared is very different. Having all the information accessible is where I like to be, but my wife wants every number already on paper in fron of her. I think it’s completely reasonable to find the numbers as you go through the forms. It’s all good fun.

    • http://www.dollarversity.com Eric J. Nisall – DollarVersity

      I’ve been saving this one for a couple weeks, trying to time it right. Everyone is going to have their own preference for getting the job done. The important part is that you get it done timely!

  • http://www.moneyspruce.com/ Jeffrey Trull

    I like to keep everything digital that I possibly can. I save copies in either Gmail where they’re easily archived or on my computer as a PDF. I found a great iPhone app called TurboScan that lets me scan any bills or receipts using my phone and save them instantly as a PDF.

    • http://www.dollarversity.com Eric J. Nisall – DollarVersity

      I’m like you in that I like everything electronic. All of my business stuff is is in QuickBooks and all my personal is in Quicken, this way it’s easily accessible and cuts down on a lot of work inputting everything. I don’t think people realize just how much easier life can be if some traditional things like paper documents are phased out.

  • http://twitter.com/prairieecothrif Miss T

    We use Quicken to keep track of everything every day which really helps as a reference at tax time. We also keep an envelope like you mentioned throughout the year so when tax time comes we can pull out all of the receipts we need. 

    • http://www.dollarversity.com Eric J. Nisall – DollarVersity

      I also use Quicken for my personal stuff, which makes it really easy to just run a report and have everything at your disposal. The envelope I don’t do personally, but I know that a lot of people aren’t technologically savvy or even trust electronic compilations so I try to appease everyone :-)

  • Melissa@Personalfinancejourney

    We always procrastinate and file our taxes right before the deadline, even though we always get a refund.  This year I plan to file early.  We are good about keeping all of our documents in a designated folder, though.

    • http://www.dollarversity.com Eric J. Nisall – DollarVersity

      Being organized is at least half the battle, but getting motivated to have it done and out of the way knocks one thing off of the to-do list. Especially if you are getting a refund, you would want to get it in your hands as soon as possible to have better use of the money (see my latest post for more on that one)

  • http://twitter.com/financialsamura Financial Samurai

    I like to just do a data dump and stuff everything in an envelope.  Then, I have a checklist and power through the thing over the next 1.5-2 hours.  I love doing my own taxes b/c it teaches me so much!

    • http://www.dollarversity.com Eric J. Nisall – DollarVersity

      You are one person I have no worries about when it comes to doing your own taxes Sam, although I might go crazy with an envelope full of stuff.  My system is just to use QuickBooks for my business, pull the data into my tax program and send it off.  for my personal, I track everything using Quicken, and do the same thing, pulling everything into the tax program, transferring the K-1 and presto done in less than 20 minutes for each.  Gives me more time to work on others’ that way.

  • http://twitter.com/financialsamura Financial Samurai

    I will have an interesting post on Yakezie.com soon that I would love to hear your thoughts on.  Perhaps next week!

    • http://www.dollarversity.com Eric J. Nisall – DollarVersity

      You write it, and I’ll comment!

  • Monikamhatfield

    Great and timely advice! I think one of the reasons many people are dreading a tax season is the thought of organizing the necessary documents. I recommend it as a New Year’s resolution – start keeping your tax related documents in order.
    It is good to have a check list so that you don’t have to make additional trip to your tax preparer. It is always better to bring too much stuff than not enough.

  • http://www.mymoneydesign.com/ MyMoneyDesign

    This is a very comprehensive list.  I’m one W-2 away from getting my taxes going.  Thanks for the reminders – I can get the rest of this stuff in order in the meantime.

    • http://www.dollarversity.com Eric J. Nisall – DollarVersity

      That’s great.  Nothing like knocking it out early.  I just wish I could submit mine.  Both my individual and business returns were done the 1st week of the year, but had to wait for the IRS to finalize the forms, which still isn’t done for K-1s so the 1040 is just waiting 

  • http://blog.familymoneyvalues.com/ Marie at FamilyMoneyValues

    We keep a tax folder (already have one started for 2012) and put everything into it when we get it that wil be needed for tax prep.  Our accountant sends an ‘organizer’ with questions for us to answer.

    • http://www.dollarversity.com Eric J. Nisall – DollarVersity

      Those organizers can be very helpful to both the accountant and yourself.  If you use it properly, it will show you what you still need to gather, and it gives the preparer a neat picture of your return.  Unfortunately too many people are too laze to fill it out at the firm I work for, and I tried to get them to stop sending it out unless it was specifically requested.  That way, less toner, paper, and postage get wasted, but I was overruled.  In my personal business I use a pdf version so my clients have the choice and nothing goes to waste, which is how I prefer it.

  • Anonymous

    I keep a tax folder on my computer and backed up every night.  I just hate keeping all the paper work for some reason.  As far as receipts I purchase everything on a credit card. To cut down on the clutter.

    • http://www.dollarversity.com Eric J. Nisall – DollarVersity

      I pretty much do the same thing.  Everything I do is recorded in Quicken and I can run a tax report to see where I stand during the year to see if any changes need to be made.  Every time a statement becomes available online, I add it to a PDF file I created and store all of my statements & pay stubs together in one place for easy reference.

      • Anonymous

        Nice setup.  How long do you keep you documents?  What about backups?

        • http://www.dollarversity.com Eric J. Nisall – DollarVersity

          I have an account with iDrive which lets me specify the directories and folders that I want monitored.  When anything within only those areas is changed, it is automatically backed up to a cloud server every day.  I also have a couple of micro SD cards which I have back-ups of everything that I do every week or so.    As far as time, I plan on keeping the data forever since the files are relatively small and it would take more time than it would be worth to purge stuff.

        • http://www.dollarversity.com Eric J. Nisall – DollarVersity

          I have an account with iDrive which lets me specify the directories and folders that I want monitored.  When anything within only those areas is changed, it is automatically backed up to a cloud server every day.  I also have a couple of micro SD cards which I have back-ups of everything that I do every week or so.    As far as time, I plan on keeping the data forever since the files are relatively small and it would take more time than it would be worth to purge stuff.

          • http://www.smartwealth.org/ Evan @ Smartwealth

            I often wondered how long I should keep certain documents for, but I end up just keeping them forever even though I know you only need to keep for seven years or so.

  • http://financialmoneytips.com Kody

    I have a three ring binder that I keep all my taxation documents in. This really helps me to be more organized, and I think it is more efficient than just a simple folder. As of right now I do not earn enough for me to hire a tax professional to do them for me. But, most definitely I will be hiring someone to do my taxes for me once I am able to!

    • http://www.dollarversity.com Eric J. Nisall – DollarVersity

      Keep in mind, that it’s not about what you earn that makes a paid professional worthwhile.  It’s the complexity of the return, as well as what you have planned for the future.  Tax planning isn’t something that only happens toward the end of the year, it’s something that taxes place all year long.

  • http://thirtysixmonths.com Marissa

    I have an accountant who is fantastic and tells me about things that I didn’t even know existed. I just keep a folder of everything and take it to him when Im ready.

    • http://www.dollarversity.com Eric J. Nisall – DollarVersity

      That’s one of the biggest reasons I use for staying away from software or “tax stores”: they can’t (or don’t) help you  in tax planning.  I keep in touch with my clients throughout the year so they have the advantage of foresight and don’t have to scramble at the last second to make tax moves.  plus, it’s just nice for them to know that it’s not only about taking money from them for doing their taxes. 

      • http://thirtysixmonths.com Marissa

        Exactly. He keeps in the loop with any changes that come up as well. The tax software is great if you have nothing to claim etc.

  • http://www.moneybeagle.com/ Money Beagle

    I use last years return information as a starting point to make sure that I have information from all the accounts listed.  There are always a few changes here and there, but the list of stuff from the previous year gives me at least 90% of my checklist.

    • http://www.smartwealth.org/ Evan @ Smartwealth

      Very good point Money Beagle, I do the same exact thing, most of the time not much has changed, so I should still expect the same forms in the mail.  I made a mistake of filing too early a couple years ago and forgetting one of my bank statements that came in late.

    • http://www.dollarversity.com Eric J. Nisall – DollarVersity

      I would have listed that if I believed that most people actually know where the prior years return is!  It’s sad, but you have no idea how many times I get a call asking me to email a copy of a tax return because a client can’t find theirs.  

  • http://www.thefreefinancialadvisor.com/average-joes-money-blog/ AverageJoe

    I definitely have everything sorted first. That said, I do have a basket near the door that ANY tax related document IMMEDIATELY goes into until I’m ready to sort. That’s decreased my “where’s that tax thing” time tremendously.

  • http://www.thehappyhomeowner.net/ The Happy Homeowner

    I organize everything into piles and keep it all in a folder marked with each tax year. I’ve already filed & received my refund this year, so it’s a good feeling to just be done! (I only received a refund due to mortgage interest & property taxes–I should have owed a bit but ended up receiving a nice chunk of change–no free loans from this gal!)

  • Andy Hough

    Thanks for the tips.  I’ll be doing our taxes and several family members’ taxes as well. Anything that will make the process go smoother will help.

  • http://www.youngcheapliving.com/ Kraig @ Young, Cheap Living

    I keep a folder in my file cabinet, titled Taxes. Since I only had one source of income in 2011, I only have one W-2. In addition, I had three bank accounts earning interest, so I’m just waiting on the three statements. Once I have them all, I will be using Turbo Tax to prepare and file my tax returns. It costs me between $30 and $60 and it only takes a couple of hours, maximum. I’ll be doing it before the end of February, most likely. But no, I won’t be waiting until the last minute.

  • http://fatguyskinnywallet.com/ Sherrian@FatGuySkinnyWallet

    Thankfully my husband does tax preparation, so he’s pretty good at staying on top of our documents. Everything we need is usually scanned and filed by the time he’s ready to do our taxes. The only negative is that our taxes are usually the last in the pile to get done.

  • Baxter S Keith

    Don’t forget to bring your accountant doughnuts and coffee.  Making your employees feel valued is invaluable!

    • http://www.dollarversity.com Eric J. Nisall – DollarVersity

      I don’t drink coffee, but I’ll gladly take a bottle for wine to relax with after the day is done!

  • http://moneyqanda.com/ Hank

    I am horrible about having all of my tax paperwork together. This is one of my biggest goals this year…to be more organized.

    • http://www.dollarversity.com Eric J. Nisall – DollarVersity

      That’s one of the most common issues I encounter, Hank.  Well, that and procrastination.  Unfortunately, it’s also one of those things that only you can fix, but committing to overcoming the problem is a great way to start!

  • tal2121

    Hey Eric,

    Fantastic tips! I will definitely be utilizing some of them. Thanks!

    • http://www.dollarversity.com Eric J. Nisall – DollarVersity

      It’s all about having a plan.  Once you have an idea of how you are going to approach it, the rest will be fairly easy!

  • http://www.investin2012.org/ Invest In 2012

    I just hand it all over to my accountant.

  • http://untemplater.com/ Untemplater

    Oh man.  I just finished all my tax returns and I got so annoyed I had to write about it.  California sucks so bad for taxes.  I’m glad I had an accountant help me out though.  Expensive but worth it as taxes are definitely not my specialty. -Sydney

    • http://www.dollarversity.com Eric J. Nisall – DollarVersity

      I’ve heard that about Cali.  Not sure how crazy the taxes for individuals are, but even I was confused when I looked into the taxation of different business structures.  That’s the good thing about living in Florida, there are no state taxes for individuals or most small businesses