The Nine-Hour Tax Preparation Marathon

Cheryl Norman

Cheryl Norman

|Read Time: 4 mins|
March 7, 2024
March 7, 2024|
Read Time: 4 mins
According to the IRS, the average non-business taxpayer invests a total of nine hours completing their income tax return.

This includes an average of three hours for organizing records, one hour for planning, three hours for preparing the return…, hours double-checking and researching tax credits for tuition, head-of-household, Required IRA Minimum Distributions, etc. An average of three hours are spent preparing information for an accountant or tax-preparer.

Nine hours is a lot of time! Here are some thoughts that may help maximize tax-preparation efficiencies and alleviate some stress before sitting down at the computer and starting your tax return.

1. Take Stock of Your Income Sources

While seemingly straightforward, overlooking certain accounts you may have can prove costly in both time and money. For example, for investors who hold iBonds in a Treasury Direct account, traditional tax statements are not automatically sent to these bondholders. iBond investors must actively access their TreasuryDirect accounts to retrieve tax information in order to complete their tax return. Compiling a comprehensive list of all of your savings and investments accounts to make sure all interest and investment income is captured on your return regardless of whether or not you received a paper statement will make the data-input more efficient and potentially more accurate.

Beyond standard W-2s and 1099s, pay close attention to accounts receiving dividends, capital gains, and interest. Be sure to scan your email for online notifications of electronically delivered tax forms, especially for online bank or investment accounts. If you have elected paperless delivery for bank or investment accounts, your tax documents may be paperless as well, necessitating logging-in to retrieve these documents. Lastly, we always recommend having your year-end statements handy. You may need these for reference along the way.

2. Document Mailing of Returns

Take a picture of the date you mail your tax forms. USPS mail delays have occurred in recent years resulting in tax filers receiving penalty notices for late-mailing when in fact the forms were mailed on-or-before the required mailing date. Having documentation and even a picture of your return going into the USPS mailbox is a good idea.

3. Start Early and Take Your Time

Work in phases to prevent burnout during tax preparation. For example, as forms start to come to you in mail or email, have a tax folder to put all of the information in. Then, organize the folder by W-2s, 1099s, Mortgage Interest, Charitable Contributions, HSA info, etc.

Have your User-Names and Passwords handy for all bank and investment custodians. If you are using online tax-preparation software, some software allows for electronically importing tax forms directly from custodians eliminating time-consuming data entry. Double check that all imported information is captured and is accurate after importing.

How Flagship Capital Advisors Can Help

Understanding the stress that tax time can cause, we are here to assist. Our clients have come to rely on us for form retrieval or to address account-specific questions to help make the tax-preparation process more efficient. We do not directly give tax-advice but we can provide you with ideas and assistance as you plan and prepare for your income tax submission.

About the Author

Cheryl Norman serves as the Principal Financial Advisor at Flagship Capital Advisors, an independent boutique wealth management firm located in Ohio. Her meticulous attention to detail and unwavering commitment to clients’ economic well-being showcase her proficiency in employing a detailed and methodical approach to personal financial planning. Cheryl guides individuals in establishing tailored financial tools for their unique situations, supporting them through life’s pivotal milestones. Conducting thorough assessments and developing strategic plans, she remains dedicated to delivering consistent service and communication. Cheryl’s areas of expertise encompass investment portfolio design, retirement strategies, college education planning, and risk management analysis.

Advisory services through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Securities offered through Registered Representatives of Cambridge Investment Research, a Broker/Dealer, Member FINRA/SIPC. Cambridge and Flagship Capital Advisors, LLC are not affiliated.