On April 6, we submitted our taxes. Honestly, I think that’s the earliest we’ve ever done it. We usually owe a good amount, so there’s no incentive for us to do it early. After owing a penalty last year, we pushed to be on top of the projected tax liability. It looks like we’ll owe a bit on the Federal side and get a refund on the tax side.
And so here’s my annual reminder that if you take the time to manage your finances all year long, then tax season is not a hurdle. I find it much easier to maintain 13 houses worth of data if I do it during the time it’s happening. Life has gotten in the way a bit, and I find it hard to even make sure I have one or two months worth of things logged correctly. I hope to be more on top of it in this coming year.
I have a spreadsheet where I log all our income throughout the year. I set up a formula where I can track each month’s income to ensure I receive the total amount that I expect to receive. I found that since some of our houses pay the same dollar amount of rent, it’s harder for me to mentally track each month’s payments, and I like having the visual and verification through this sheet.
Then there is a tab for each property in that same workbook. The sheets are set up based on monthly expenses, and I plug in projected expenses (e.g., taxes, insurance, utilities). This helps give me a verification that expenses have been paid when owed. By now, I have nearly every invoice emailed to me, but I like having this ‘fail safe’ look at what may be owed that I hadn’t paid in a given month.
Then Mr. ODA enters our investment items, W2 income, and interest income into our tax software. Then I sit down next to him and dictate the numbers from my spreadsheets so he can enter them into the software. We have 13 rental properties, so this is time consuming. However, it’s really easy. We enter our data into the fields for each house. This year took us about 90 minutes to enter the rental property information.
I know multiple people who file extensions because it takes so much time and effort to gather the documents for their accountant to do their taxes. It’s like they don’t think about their taxes until April 1 and then decide it’s too much to do in two weeks. This is where being prepared all year long comes into play. Make it easier on yourself and put yourself in a position where it doesn’t feel overwhelming.
One Dollar Allowance 