March 6, 2016 • Newsletter
Welcome to March, a month of celebrating women’s history (and our future), college basketball, and the welcome arrival of spring. If you only do one thing this month, you should probably fill your bird feeder. Or plant a butterfly garden. If you do two things, you should probably watch basketball. (The grace! The athleticism! The underdog stories!) And if you do three things this month, you should also prepare your taxes.
Seriously. Prepare your taxes. It’s time.
I’ve Already Filed!
Many of you have already filed and received refunds. Congrats! Wasn’t it fun to look back on 2015 and see all you accomplished?
Since you’re ahead of the curve, take a bit of time this month to plan for 2016 based on the budget you’ve prepared for the year. (Haven’t done that yet? It’s time.)
Make sure your estimated tax payments and any withholdings you may have reflect the expected income and business expenses you’ll have for the year. And if you are making estimated tax payments, the first one is due in a few weeks on April 15, 2016. Enjoy!
While you’re looking at your 2016 budget, consider connecting it to some tangible financial goals. Some of my favorites include (1) a savings goal and (2) a list of charities I plan to support in 2016. Bonus: You’ll be able to check in with this goal around this time next year when you’re preparing your 2016 taxes and getting lots of acknowledgements from your favorite charities.
If this isn’t you—meaning you still have to file your 2015 taxes—keep reading. Then come back to this part in a few weeks once you’ve finished. You may have an estimated tax payment or a budgetary goal to to revisit as well.
I’m Finally Ready to File.
Congrats on getting ready to file! If you are like most creative individuals with multiple sources of income, you probably have a stack of 1099’s and tax letters waiting for your attention. Gather them all—even the ones that are still in envelopes—and set aside a few hours this month to finish the task.
Full disclosure: I always set aside 6-8 hours to complete our taxes, but that reflects a number of basketball distractions and some complicated tax choices. I also really enjoy the solitude while I’m doing our household taxes. I might stretch it out a bit. But don’t tell anyone.
For most freelancers, particularly those who haven’t had major changes since 2014, four or five hours should be plenty of time. What’s a major change? A dramatic change in income earned, a big difference in the number of tax forms you received, a geographical move to a new taxing jurisdiction (state or city), or major personnel changes in your life (marriages, divorces, births, deaths). All major changes will add a bit of time to your tax preparation task. But that’s okay. You’ve set aside a major chunk of time to do this for a reason.
Revisit your 2015 budget and your ongoing list of expenses and make sure you’ve received all the tax forms you were supposed to receive. (Mostly I’m talking about 1099’s, W-2’s, and acknowledgments of gifts from charities you supported.) This is a great time to organize your receipts and business expenses as well, especially if you fell a bit behind during 2015. (For what it’s worth, now isn’t the best time to choose a new system. Save that for after your 2015 taxes are finished. While you’re doing your 2015 taxes, though, pay attention to things that annoy you with your current system, and when you take time next month to investigate options, you’ll have a keen sense of what you’re looking for.)
Screw This, I’m Hiring an Accountant.
Last but not least, if you are planning to hire an accountant to help and you haven’t already engaged someone, it may be too late for this year. It’s probably worth asking around though, just in case.
If it is too late, tough it out. You may realize you are more competent than you think. And if hiring someone is definitely on your radar for next year, set up an appointment with a few accountants in May. Choose your favorite and start using whatever system they recommend to make next year’s tax season a breeze. (Oh and budget a few hundred dollars to pay for the accountant next year.)
Recap
It’s tax time! Whether you have finished already or barely started, there are some great tax things to think about this month.
- File them.
- Celebrate the successes you had in 2015. (Yay!)
- Think about how you want to organize your records for next year. (Then do it.)
- Revisit your budget for 2016 and your goals. Prepare your first estimated tax payment (if necessary).
If you do four things this month, why not investigate the tax plans put forward by our collection of presidential candidates? It’s a great time to find one that meshes with your needs and priorities.
Or just watch more basketball. Your call.
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