Apps to make taxes easier next year | taxes
Taxpayers gave a collective sigh of relief after the April tax deadline passed. Another year of jihad for collecting receipts and calculating expenses is over.
However, tax season doesn’t have to be a crazy rush to collect tax documents. Instead of waiting until next spring to get organized, start now. Mobile apps make it quick and easy to set up automated systems to capture the information you’ll need next year.
Many CPAs no longer accept paper documents by mail, says Wendy Barlin, a certified public accountant and author of This Deductible: Simple Tips and Tricks for Finding More Corporate Tax Deductions. “We like the apps because they generate downloadable reports,” she explains.
If you are going to use an app, make sure you use it consistently and completely throughout the year. “My biggest concern is that people will push the app and think it’s going to do all the work,” Barlin says. “The app is only as good as it is used.”
If you’re ready to make next tax season the easiest season ever, here are 10 apps that can help you.
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Mint is known as a budgeting app that helps people track spending and measure progress toward financial goals. But while doing so, it also ends up collecting data needed for tax time, such as spending on itemized deduction categories like medical expenses and charitable gifts.
“Mint provides the most beautiful reporting,” Barlin says.
These reports can then be used for your tax preparation or submitted to the CPA or tax preparers. Since Mint can be linked to multiple financial accounts, it can be a convenient way to put together a complete picture of your annual spending.
The basic version of Mint is available for both Apple and Android devices, but Mint Premium is only available for iOS at the moment.
cost: Free for the basic ad-supported app, $4.99 per month for the ad-free Mint Premium.
While knowing how much you’ve spent in the different categories is useful for filling out tax forms, you’ll need more than that in the event of an audit. Barlin says the IRS will want to see receipts documenting expenses, and a credit card statement does not count as a receipt.
FileThis is something of an electronic filing cabinet and can be used to store and categorize everything from bank statements to receipts and utility bills. The app uses bank-wide security and will fetch up to three years of previous account statements from linked accounts as well as new account statements when available. As an added feature, FileThis will create billing reminders as due dates approach.
While FileThis provides users with cloud storage, it can also send items to other accounts such as Dropbox, Google Drive, or Evernote.
cost: Free for the basic account, $2 to $5 per month for upgraded accounts.
Neat is another application that can capture, upload, and categorize documents from a variety of sources. Its OCR software can pull information from the receipt image and organize it. Then, when needed, the data can be sent to other tax filing software such as QuickBooks, TurboTax, or H&R Block.
“It’s a great way to keep track of every document that comes into your world,” Barlin says. She recommends that people use Neat not only for receipts but for all paperwork that may be required in the future.
Tracking receipts is just one aspect of Neat which offers a powerful set of tools that can be used across different desktop and mobile devices. These include bookkeeping, document management and billing. Workers who only want to scan a few receipts per month can find cheaper alternatives, but for freelancers and small business owners, Neat can be a good investment.
cost: $29 per month or $240 when billed annually.
Mileage deductions can be worth hundreds of dollars for self-employed and business owners, but the IRS requires taxpayers to keep records of where they drove and when. You can keep a laptop in your car to record dates and destinations, or you can use MileIQ to automate the system.
When the app senses that it’s traveling in a car, it exits sleep mode to track the route, start and stop times, and other data the IRS requires to deduct business mileage. Users can then categorize the drives as personal or business trips and generate reports for use at tax time.
MileIQ is available to individuals and teams alike and has over 1 million active users.
cost: Free for up to 40 drives, $5.99 per month for unlimited drives and IRS reports.
FlyFin considers itself the world’s first AI tax engine for the self-employed. Designed for those who need to file a Schedule C tax form, it acts as an expense tracker and tax service.
“I used to file a (tax) extension every year because I hated having all my information collected,” says Jadeep Singh, FlyFin founder and CEO. Realizing that nearly all the information required to file taxes is available digitally, he set out to use his computer engineering background to create a system that would allow self-employed people Easily capture and categorize discounts.
With read-only access to financial accounts, FlyFin AI recommends expenses as potential deductions. Users can accept or decline these suggestions using the service’s iOS app. If they are not sure if something is deductible, it can be sent to the CPA for review. “AI does all the heavy lifting,” Singh says.
At the end of the year, self-employed people can submit their data to the FlyFin CPA to prepare their taxes or export information that will be submitted to the tax preparer of their choice.
cost: $7 per month for the basic plan, and $16-$29 per month for plans that include tax filing.
Another option for freelancers is Keeper Tax. This app scans bank accounts and credit cards for potential discounts, although it’s more limited in its app than FlyFin. While it does provide a way to ask tax professionals a question, Keeper Tax does not have CPAs that will complete the return for you.
“That’s more for people who go back on their own,” Barlin says. At tax time, users can complete and file their tax returns using Keeper Tax.
While Keeper Tax offers a variety of free resources on its website, such as tax calculators and articles on tax topics, details about the iOS apps’ functionality and pricing are few.
cost: $16 per month, additional data export fees may apply.
As with other expense tracking apps, Expensify is geared towards freelance or self-employed users. However, it can be useful for anyone who wants to easily keep track of expenses and mileage in the same place.
The personal and self-employed plans are accessible for free and come with options to send and receive money, send invoices and receipts to managers, and split bills with others. This is in addition to tracking miles and expenses.
Data entered through the app can be accessed through your Expensify online account, and custom reports are also available through business accounts.
cost: Free for up to 25 SmartScans (receipt image that records all details in the app) per month, $5 to $9 per month for business accounts with add-ons (price per person).
If you already use Evernote, the service’s Scannable app might be a logical option for you to scan and organize receipts as well as other documents. Available only for Apple devices, Scannable lets you tag tax-related items to easily find them in April.
Up to 60 MB of storage is free for basic Evernote users. Those looking for more storage or features can upgrade to a Plus or Premium account for an annual fee.
cost: Free for the basic account, $7.99 to $9.99 per month for upgraded accounts.
Digits is a relatively new web-based program that launched in 2018, and co-founder Wayne Chang says it offers something not available anywhere else. Small business owners and solo entrepreneurs can combine Digits with QuickBooks to create a “digital twin” of their physical business.
“You have the ability to see the lifeblood of your business at your fingertips,” says Chang. The company hired 3D artists to help create an easy-to-use financial tool. “It doesn’t look like a financial app,” he explains. “Looks like he’s out of a video game.”
With Digits Search and Digits Reports, users can quickly find expense information and gather necessary details for tax time.
cost: Free for starter plans.
Obtaining receipts is vital to filling out tax forms, but the IRS will want to see more than that in case you audit.
“If you ever get audited, one of the things they ask for is a calendar,” Barlin says.
IRS auditors may look for calendar entries to help justify expenses, especially those related to travel. While a paper calendar works, an electronic calendar may be easier to use and share. Google, Apple, and Outlook calendar apps are popular options, but any calendar that comes with a mobile device should work as well.
cost: Free if you use a pre-installed calendar program on the device.