Tax time can be a mad scramble to collect information. You wait for all the information to be available, then another one shows up in the mail. And another. Eventually, you cross your fingers, close your eyes, and punt.
Whether you use a preparer or do them yourself, it’s stressful and causes costly rework.
What you need is a guide. A checklist you can follow to make sure you’ve collected all the information you need. A cheat sheet to make sure you have all the right answers.
Any such cheat sheet you find online—including this one—isn’t going to suit you perfectly. It won’t have everything you need and it will probably have a bunch of things on it you don’t need. What you need to do is create your own.
To get started, create a tax summary note in Evernote. Call it “2024 Tax Cheat Sheet”. You might include sections such as:
- Income. Include the W2 for each employer. Include a 1099-G if you got a state tax refund. List your business interests, like Schedule K–1.
- Investing. List each savings, brokerage, and investment account you have. If you know which form(s) they’ll send you (1099-B, 1099-DIV, 1099-INT, etc.), list them separately. If you have distributions from a retirement plan, including a rollover or backdoor Roth, don’t forget the 1099-R.
- Taxes Paid. List the taxes you’ve already paid that qualify for a deduction, such as state income taxes and vehicle license fees.
- Charitable Donations. If you donate to the same causes each year, list them. As you make donations throughout the year, fill them in or add them to the list.
- Mortgage Interest. Do you have a mortgage? Put a space for the interest you paid on the mortgage for your primary residence.
- Educational Expenses. Have kids in college? Track what you paid for tuition, fees, and books.
Review last year’s return. What information did you need to do your taxes last year? Include anticipated items, like donations to church and the PTA. Update it as items come in. Use this year’s final cheat sheet as a starting point for next year’s.
Update it throughout the year. When you make a charitable donation, create a note with all the information about the donation and link to it from the cheat sheet. Do the same thing when you get a tax form: stick it in its own note and add a link to the cheat sheet. Don’t stick everything in one document; it will become unwieldy.
At the end of the year, you’ll have a nice one-page summary of all the tax-related events for the year. You’ll also have a checklist of the tax documents you’re waiting for. Once you’ve received all the documents, you’re ready to send your information off to your accountant! You’ll be their favorite client.
You’ll probably forget something. Don’t worry about it—you would have forgotten about it without the cheat sheet, anyway. When you remember it, update the cheat sheet. You’ll need to pay taxes again next year.
Question: What items did you include placeholders for in your cheat sheet? What did you forget? Share your thoughts in the comments, on Twitter, LinkedIn, or Facebook.
