WELCOME TO FEBRUARY, 2010

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IT'S TAX SEASON!
ARE YOU GETTING YOUR MAXIMUM REFUND?

By Diane Snead

As the April 15^th deadline approaches, many professionals are dreading meeting with their CPA.  Not because paying taxes is scary, but the preparation for the meeting can be a time consuming nightmare.  Where are those lunch receipts?  Why isn’t that deduction already accounted for in QuickBooks?  Did I make any charitable donations?  The IRS requires individuals to keep receipts as proof of expenses.  If you don’t have your receipts, you can’t claim the deduction.  You’re missing out on FREE MONEY from Uncle Sam!

Wouldn’t it be nice to just grab a folder and head off to your CPA, rather than spend hours and hours gathering all those papers?  This relates directly to our core values at Type A.  That is, spending a few extra minutes of time during the year will save you all of the extra hassle at tax time. 

There are two simple steps to keep your receipts organized.  First, you need to handle the receipts as they come in, and second, you’ll need a way to file the receipts.

A great solution I’ve found to handle incoming receipts is to implement a “Receipt Dump”.  This location can be a folder, small box, or envelop that is easily accessible at your desk.  At the end of the day, transfer the receipts from your purse, billfold, or briefcase into your Receipt Dump.  They will be ready for you to reconcile in your account at the end of the week or month, and will also be at hand should you need to return an item. 

The next step after the receipts have been entered is to file them.  If you prefer to file by date, consider using a tickler file separated by month.  Or, keep manila folders labeled by month in your filing cabinet.  To organize by deduction, simply write the deduction types on manila filing folders, or use an expandable multi-divider to keep everything together.

Don’t want to deal with the paper?  The IRS doesn’t want you to either (IRS Bulletin 1997-13).  They’ll accept scanned copies of receipts just as they would paper.  Considering how the ink on receipts can fade over time, creating a digital copy is probably your best option to retain those slips.  Several options are available to create electronic copies – without using the scanner on your printer.  Call Type A if you’re interested in discussing these paperless options!

After the tax year is done, and your tax paperwork perfectly filed, don’t let your organizing go to waste.  Remember to store your receipts in a safe location.  A paper banker’s box in your home basement is not considered safe!  Think about floods, water damage, mice… (certainly not in YOUR office!).  It doesn’t make sense to save all of those receipts if they could be damaged in the future!

Keeping track of receipts is just one way to streamline your work flow processes, and if done diligently throughout the year, will save you all of the headaches and rushing at tax time.  Why go through the hassle one more year?

You can have your tax professional thank me later….

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TAX FACTS

• The complete Internal Revenue Code is more than 21 megabytes in length, contains more than 7.8 million words.  Printed 60 lines to the page, it would fill almost 16,000 letter-size pages. 
• The IRS sends out 8 billion pages of forms and instructions each year. Laid end to end, they would stretch 28 times around the earth. American taxpayers spend $200 billion and 5.4 billion hours working to comply with federal taxes each year, more than it takes to produce every car, truck, and van in the United States. 
• The IRS employs 114,000 people - that's twice as many as the CIA and five times more than the FBI. 
• The IRS employee’s manual has instructions for collecting taxes after a nuclear war.

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