Bwahahahahahahahaha. That is so remote--A Tax Refund--that I can't even imagine it. Oh, sure--we used to get refunds. Before I was self-employed, back when we both had withholding. Never very big refunds, but refunds nevertheless. Now, of course, it's the opposite from a refund: I have to pay the taxes on income that hasn't yet been taxed. Plus I foolishly pay a ton of money to the woman at H&R Block who does our taxes every year. I know I could pay less--the H&R Block software, for example, charges a flat fee for things like adding the line for the royalties for my mother's oil and gas lease. That would make sense if the income were many, many dollars, but for me, this isn't the case: the flat fee for including that one line IS MORE THAN the income from that tiny, tiny little oil property. Seriously. I lose money on this every single year. (OK, there's a reason: my mother always said, "Someday this will be yours. It's not much, but it was my mother's." So the income from this was split four ways, of course, amongst my mother and her siblings, and would be tiny even BEFORE that. But it was important to my mother, and I had to fight like crazy to have it transferred into my name--meaning I had to get on the phone with the oil and gas lease company's lawyer and Use My Big Words until I got him to back down and do the transfer. All for less money than most people spend a year on paper clips. But I feel like it's my responsibility, although frankly I just keep hoping the damn thing dries up already.)
So, yeah, I need to find a good CPA, but here's the deal: as I mentioned last time, I'm terrified of the IRS, and I don't know that I could find anyone I would trust to Do It Right so that I felt safe. So we go every year to see Karen, who's very nice and gentle and understands (although still teases me about) my total head-banging terror at the entire process. It's not her fault that H&R Block gouges me every year, that I pay hundreds of dollars in tax prep fees. I am not exaggerating here.
I need a Tax Help Fairy, is what I need.
Anyway, so to minimize the trauma, I try to stay organized all year long. It's bad enough that I have to go and deal with this; it would be ever-so-much worse if I had to start from scratch in getting organized before I could even begin.
At the beginning of each year, I make envelopes for all the various categories of which I need to keep track:
When I buy stuff In Real Life, I put receipts in my wallet, and when I clean it out, I check all the receipts and put them in the appropriate envelop. This takes mere moments--I have a drawer dedicated to these envelopes, so it's really easy to do this without thinking. When I buy stuff online, I print out the receipt and put it in the envelope.
I use an accordion file, divided by month, for everything else--everything that has to do with anything--I put financial stuff, medical stuff, anything I might possibly need and tons of stuff I won't need--anything that's not an actual receipt for something I bought (see above)--I drop it in the section for that month.
I use one check register per year. On December 31st, I close it out and put it in the accordion file.
When I get the various W-Whatever forms, I put those in another envelope all together and rubber band them to the outside of the file.
Then, on Tax Prep Weekend, I start slowly. I go through the drawer with the envelopes and find any stray receipts and put them where they belong. Then I go through each envelope and check each receipt, make sure there's nothing in there that doesn't count, like food or something that's not a business expense. I sigh sadly and throw those away. Then I separate the receipts into sub-categories--I keep track of Michael's receipts and keep them separate from Hobby Lobby receipts, for instance. There's no real reason for this, but by this time in the process, my anal-retentiveness has kicked in. By the end of Tax Prep Weekend, I'm organizing receipts by size and length--so that the amazingly long one from Michael's, where each skein of floss was entered separately and the receipt is over 3 ft. long--is at the back. It's silly, but things get worse as I go along.
|This--the long one in the back--is the Michael's receipt for floss. |
The kid told me that I had the longest receipt for the least amount of money spent that he'd ever seen
(it's all individual skeins of DMC floss.)
I highlight the total on each receipt, and then I add them up. Then I re-add them, to check. I write the total on a sticky note, staple that stack together and put the note on top, and move to the next category. (That pink thing at the top is the sticky note with the total.)
The single biggest help, besides this system, is that I pay for almost everything with my credit card, and they provide a yearly summary with things broken down into categories--lodging, meals, services, merchandise. This makes it really easy to keep track of things for which I often don't have receipts: monthly payments for Skype (I pay a fee so I can call cells and landlines, since most people I interview and podcast don't use Skype), Libsyn (my podcast host, where I have to pay monthly for storage), the various charges for my website and for extra storage for Google--stuff like that that I would probably forget about if that annual summary didn't have it all laid out for me. I LOVE this summary, and I've got to tell you: I love my credit card company. While we've had one glitch, last year (and they finally agreed that I was right, although it took a couple of months), for the most part, they've been fabulous. I've been with them for almost 30 years. I don't pay any fees, and I don't pay interest because I don't carry a balance. So they're probably going to drop me at some point since they're not making any money off of me, and I'll be very sad because they're so useful to have around. If you don't use it already, check and see if your provider offers an annual summary--you request it online, and it's there to download and print out in a couple of days. The best thing ever if you're self-employed and have a bunch of random little expenses that might otherwise be overlooked.
So at the end, I have all these various categories with totals, and I go to last year's Word document--the first time I've used the computer for this process, as I do all this by hand, with actual paper and pen and sticky notes and an ancient calculator--and make sure I've gotten everything and make a document for this year's totals and fill in the blanks and print copies for me, for The EGE, and for Karen, who does the taxes. Then I take everything with me--I leave all this in the truck, but I take it, just in case--and we go to the appointment and spend a couple hours with Karen--it takes 2-3 hours for her to input all of this. I sweat, I get a stomach ache, I whine and moan and, yes, I really do bang my head on the table. Karen and The EGE laugh at me but in that concerned way that means they're giving each other alarmed glances over my head, which is, by then, lying on her desk in misery. I reallyreallyreally hate all this. Then, at the end, we get to write some big checks, and I come home feeling horrible and determined to figure out a way to avoid the whole miserable process the next year. And then I do it all over again.
Oh, and The EGE usually takes Karen flowers the next day for having put up with me and for saving us from having to write even BIGGER checks--she knows things we should include that we would never have even considered on our own--she remembers to ask about things like business cards and booth fees and stuff. On my own, I would be terrified to include these as expenses lest they set off alarm bells to The Men in Black.
MIB: "What's this? A $10 fee to the Midland Downtown Farmers' Market? Does she seriously think we're going to pay for her organic cauliflower? Let's go get her!"
(The Midland Downtown Farmers' Market has an Authors' Day each year, and we have a table for our books, and there is, indeed, a legitimate Booth Fee. But on my own I would be terrified to include it, less I piss off Those Guys.)
Whew. I feel queasy just writing about this, but I hope maybe it gives someone else some useful ideas--about the envelopes, maybe, or the annual summary from the credit card company. And if anyone knows an excellent and reliable local CPA who has experience with someone who does what I do (meaning they'd know the kinds of expenses I can legitimately deduct and, unlike me, doesn't get faint at the word "depreciation"), let me know. We love Karen, but she doesn't get to set her fees--it's all automatic with the H&R Block software, and so it doesn't benefit either of us, which is too bad. If the huge whack I'm paying went to her, she would be worth it. But it doesn't, and that's just ridiculous.
And, oh, yeah: someone who is patient and wouldn't shoot me while I was banging my head on their desk. That would be a good thing, too.
OK--time for a walk. It's Saturday, it's almost 3 pm, and I'm still in my pajamas. And not in a good way, as if I'd been so involved in some project I just hadn't taken time to get dressed. Nope, it's because I've been here
all afternoon so far. What a way to spend a weekend, huh? But it could be so, so much worse. Like, you know, if what I started with was a cardboard box full of random receipts all jumbled together and no idea where to start. Eeeeek.
If you're doing your taxes, too, I wish you the best of luck and a calm and speedy time of it~~XO