Many Americans miss out on potential savings simply because they aren’t organized when filing their taxes. Poor organization not only adds stress but can also cause missed deductions or errors that shrink your refund.

By keeping your tax documents organized, you can reduce taxable income, avoid costly mistakes, and potentially increase your refund. We'll explain how.

Key Takeaways

• Last-minute tax prep can cost you. Rushing to file may result in missed deductions and credits that could have lowered your tax bill.

• Stay ahead year-round. Upload documents as you receive them to ensure a smooth filing process at tax time.

• Use Trustworthy's digital vault to track deductible expenses. For example, you can store business, childcare, and medical expense records in Trustworthy's Family Operating System®.

Why Organization Matters for Taxes

Tax season can be an emotional time marked with stress and anxiety. A survey conducted by Cash App Taxes found that 38% of millennials say tax stress has brought them to tears. 

“It is important to organize financial records, receipts, and tax-related documents," says Gary Jain, the CEO of Los Angeles accounting firm Ledger Labs. "This is crucial for accurate tax filing, maximizing deductions, and complying with tax laws. It also comes in handy during tax preparation, reducing the risk of errors, missed deductions, and penalties while saving time.

“… There is a requirement for proper documentation that ensures compliance with retention requirements and provides evidence in instances of audits. Additionally, organized records support better financial planning, budgeting, and efficient responses to tax authority inquiries.

"It is also important to regularly update and categorize records using folders, apps, or software. You can simplify the process, minimize stress, and maintain control over your financial health.”

Common Challenges 

Tax season is overwhelming enough on its own, but adding in scrambling to gather documents and receipts can make this period feel especially trying. Missing documents like 1099s, W-2s, and receipts for deductions can lead to missed opportunities for savings. Rushing to meet tax filing deadlines can also result in errors like misreporting income or forgetting to claim for deductions. 

Andrea Coombes, a tax specialist and writer, urges taxpayers to adopt a storage system that works for them because disorganization can be costly. Coombes points out a common example, saying, “You might not be able to find that receipt for your childcare payment, and then you decide not to declare the benefit, and you lose out on a valuable tax break.”

The simplest oversight, such as not claiming the child tax credit because of missing documentation, can result in a higher tax liability. 

The Financial Impact 

A lack of organization during tax season can lead to costly mistakes, but a little preparation can help you avoid them. According to the Treasury Department’s inspector general for tax administration, interim results from the 2024 filing period showed that 151,517 individual tax returns contained errors. Mistakes on tax returns can delay refunds and even result in missed refunds.

Staying organized for tax season is simple with digital tools like Trustworthy. Designed with families in mind, Trustworthy’s Family Operating System® helps you manage financial documents and stay on top of tax deadlines.

Trustworthy’s AI-powered Autopilot features take the hassle out of organizing your financial documents. With predefined filing categories and smart file name suggestions, you don’t have to build a system from scratch. Plus, its smart search function makes it easy to find exactly what you need, when you need it.

Reducing Your Tax Liability Through Organization

Maximizing Deductions 

Maximizing your deductions is one of the best ways to reduce your tax liability, and all you need to do is keep track of your eligible expenses. Some commonly overlooked deductions include: 

• Medical expenses: If your medical expenses exceed 7.5% of your adjusted gross income for the year, you can deduct them from your tax return. Remember to keep records of bills, prescriptions, and insurance statements.

• Business expenses: Freelancers and small businesses have more deductible expenses than they may realize. Home office costs, equipment expenses, mileage, and software subscriptions can be business deductions.

• Charitable contributions: Giving to others can help you during tax season. Donations of clothes, household items, and money can be deductible if you have receipts or proper documentation. 

Keep track and store all receipts and relevant documentation with Trustworthy. Never lose important receipts by uploading them as you receive them using Trustworthy's mobile app scanner. Organize the receipts into predefined categories, and find them again with other related information with the smart links search tool.    

Lowering Your Taxable Income 

Want to pay less tax? In addition to claiming deductions, you can lower your taxable income through pretax contributions to health savings accounts, retirement accounts, and other savings plans to reduce the taxable income. 

Proper organization starts with having the correct documentation. For 401(k) or IRA contributions, ensure you have proof to include with your tax return. Trustworthy helps you stay on top of this with predefined categories and automated monthly reminders to upload essential tax documents.  

Increasing Your Refund With Accurate Records

The key to increasing your tax refunds is keeping accurate records of everything and tracking tax credits you may be eligible for. 

Tracking Refund-Boosting Tax Credits 

Reduce the amount of tax you owe with tax credits, which are even more valuable than deductions. Some popular tax credits to consider are: 

• Child Tax Credit: This credit is worth up to $2,000. To be eligible, your dependent (stepchild, foster child, brother, sister, half-brother, half-sister, stepbrother, stepsister) must be under 17 at the end of the tax year, they must have lived with you for at least half of the year, and you must have provided at least half of the child’s support during the last year.

• Earned Income Tax Credit (EITC): This credit is worth up to $7,830 but is only available for low-and moderate-income working families. If your income is lower than the income limit, you may qualify. For example, a single person with no dependents must have an adjusted gross income of $17,640 or less to qualify for this credit.

• American Opportunity Tax Credit: This credit is worth $2,500 per eligible student (someone claiming as a student). This credit is designed to help parents offset the costs of postsecondary education. To qualify, you need to have paid qualified education expenses for higher education, and the eligible student is either you, your spouse, or a dependent. 

When you claim these credits, you must have accurate records, including proof of income, tuition payments, and childcare expenses. The Earned Income Tax Credit is one of the most overlooked credits due to missing or incomplete documents.

With Trustworthy, you can keep all of those records in one secure location. Trustworthy’s advanced security features include AES 256-bit encryption, multi-factor authentication, biometric authentication, physical security keys, on-screen redaction, and advanced threat detection. 

Trustworthy protects your documents one step further with tokenization. This world-class security feature replaces your sensitive data with unique tokens to securely store your data outside your Trustworthy account for added security.

Preparing for Tax Season With Trustworthy

Tax season doesn’t have to be stressful. Trustworthy’s Family Operating System®, a powerful document management platform, offers key benefits:

Save Time and Reduce Stress

For many, tax season is overwhelming due to a last-minute scramble for documents. Lawrence Sprung, a certified financial planner in Hauppauge, New York, emphasizes the importance of staying organized:

“Being organized is a huge help because it will ensure the information you are providing to the IRS is complete and accurate. Start a file at the beginning of the year, and stay organized. Meet with your tax professional throughout the year to ensure there will be no tax surprises when you finally do file.”

With Trustworthy, staying organized year-round is effortless. Its Chrome extension lets you upload documents instantly via drag-and-drop, email attachments, or screenshots. The extension requires multi-factor login to protect your account and encrypts files as they’re sent to Trustworthy.

Share Documents Securely

If you use an accountant or tax preparer, avoid mailing physical documents or sending sensitive information via email. Instead, use Trustworthy’s SecureLinks™ feature, which allows you to share documents securely with unique, time-limited links.

Frequently Asked Questions 

What should I do if I make a mistake on my tax return?

As soon as you notice your mistake, you need to file an amended tax return using Form 1040-X to avoid refund processing delays. 

Do I need to hire a tax professional if I have a simple tax situation?

For individual returns that don’t have a lot of deductions or tax credits, you can use software for filing help. If you’re unsure of what documents to provide, seeking help from a tax preparer is a good idea.