THE 12 BY 12 TAX ORGANIZING SYSTEM
With less than one hundred days to the close of the year, taxpayers could really benefit now by using the 12 by 12 system of organization to get themselves ready to prepare for their income tax filings early next year.
The 12 by 12 organizing system is really simple to use and it gives you time to get organized using a thorough process. You allocate one day of organization to each month of the year. The days do not need to be consecutive days. You would spend enough time on each allocated day to go through your records. You would want to go back through your checking account starting with the month of January and view all payments for anything tax related. You will do the same for your credit card statements as well as your cash receipts. Anything you think is tax related you will set aside in a separate folder for that particular month.
The key to being successful with this strategy of organization is to really set aside the time to work on this project in a relaxing atmosphere. You do not want to allow yourself to do more than one months’ worth of organizing on any given day. This way you do not become overwhelmed and you won’t get bored with the process. Having time set aside without interruption in a relaxing atmosphere will keep you focused and allow you to think clear. This clarity allows for your thoughts to flow and provides a great opportunity to jot down questions you may want to ask your tax professional as you go through your documents. Each day when you finish one month, you will have a sense of accomplishment: one down eleven to go!
The simplicity of this strategy is useful to everyone who has to file their income taxes or anyone who is trying to stay within their budget. Looking back on what you spent for the year using a holistic approach really shines a bright light on your spending habits. It also provides for a recap of the year which may trigger other deductions as well. When you see a check you made out to a charity, you also want to bear in mind the out of pocket costs for participating in a charitable event. The out of pocket costs such as gas or food consumed at the event is tax deductible.
Keep in mind as you are going through the months and going through the transactions anything you think is questionable as a tax deduction you will want to include in the folder. It is better to error on the side of too much information then to miss out on a tax deduction. Allow the tax professional to ultimately decide if it is a tax deduction. Also, make notes of any income you received that is out of the norm for you. At the end of your 12 by 12 organizing experience, you would have spent twelve days getting your records together that took three hundred and sixty five days to create. What an accomplishment!