End of Year To-Do List

An End of Year To-Do List that Will Make Your Taxes (and therefore your life) Easier

1.) If you haven’t yet, create a folder on your computer desktop titled ‘2021 Taxes.‘ Into this folder you’ll put

* All the tax documents you’ll receive electronically. It’s a good idea to scan the documents you receive on paper so that you have them saved electronically as well.

* Any acknowledgments or receipts you receive for charitable donations

* Any invoices or receipts for medical expenses. You will only need these if your medical expenses exceed 7.5% of your adjusted gross income (AGI), but it’s a good idea to save them in case you have a medical emergency. Then you can take all expenses from the beginning of the year.

* If you’re self-employed, a spreadsheet of your income and expenses for the year. It’s also a good idea to keep scans or photos of all your business expenses. Most likely, you won’t have to show them to your tax preparer, but you’re required to save them in case the IRS ever asks to see them.

* If you teach any grade from kindergarten through 12th grade (or you’re a counselor, principal, or aide in an elementary or secondary school), you can deduct up to $250 in out-of-pocket classroom expenses. Put a list of your expenses and scans of your receipts into your tax folder. If you have questions about what expenses qualify, this page on the IRS website is helpful https://www.irs.gov/newsroom/teachers-can-deduct-out-of-pocket-classroom-expenses-including-covid-19-protective-items

* If you’re paying childcare expenses, a statement from your provider showing how much you paid them in 2021 as well as their address and Tax ID number.


2.) Make some last-minute charitable donations

In 2021 taxpayers who take the standard deduction can still take up to $300 in monetary donations ($600 for married couples filing jointly). Charities must officially be nonprofit and have 501(c)3 status. You can double-check their nonprofit status on the IRS website ( https://www.irs.gov/charities-non-profits/search-for-tax-exempt-organizations ) Make sure to save the donation acknowledgment in your ‘2021 Taxes’ folder.


3.) Take Required Minimum Distributions

You may be penalized if you don’t take the Required Minimum Distribution (RMD) from your IRA or retirement plan account before the end of the year if you are 72 years or older or if you inherited an IRA or retirement plan account from a deceased relative. The IRS website has more information about it here ( https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-required-minimum-distributions-rmds )


4.) Record Your Car Odometer

When you get home on December 31st or before you go out on January 1st, take a picture of your car odometer, then save that picture in your 2021 Taxes folder and your 2022 Taxes folder (see item 5). Not everyone needs to track their car mileage, but as with medical expenses, sometimes you don’t know until the middle of the year that you can take the deduction. It’s easy to snap a picture of your odometer so you have a starting point just in case you need it.


5.) Create a folder on your computer desktop titled ‘2022 Taxes.’

Save your medical expenses, business receipts, and a picture of your car odometer. Getting a start on your 2022 taxes now will make next December’s End of Year To-Do list much, much easier.


Will following all these steps guarantee your tax prep will be carefree? Sadly, no. But they will make it easier to solve some of the problems that might crop up.


Schedule your tax prep appointment now. https://calendly.com/thebottomline