Issue 52.10
In a discussion about taxes the other day a friend said to me “I have been guilty of filing my taxes at midnight on April 15th, but as I get older and my taxes get more complicated, I can’t afford to wait until March to start getting my taxes in order.”
With that in mind, here are five Tax Tips I’ve found helpful to start doing in January to ensure filing your taxes is as painless as possible.
#1: Make a Checklist for Collecting Tax Forms
If your taxes are simple (e.g., you have one employer and no investments, itemized deductions, or other income), you may just need your W-2 to file your tax return this year. Many of you aren’t so lucky. You may have multiple W-2s, a half dozen 1099s, and myriad other forms coming your way in the next couple months. Make a list of all the tax forms you should receive and designate a place to store them as they come in. If you haven’t received a tax form you need in late February, call the issuing organization. Filing a return without a requisite form is a hassle and, while allowed, is not recommended and could be subject to penalties. (Also, if you have moved since January 2010, be sure all the organizations issuing you tax forms have your new address!)
#2: Decide How You’ll File
Do you use an over-the-counter tax software, an online tax prep program, a tax accountant, or good old paper and pencil? However you file your taxes, buy the software, hire the accountant, or get the paperwork you need from someone or online. This step isn’t that difficult, but it’s good to have it out of the way. Hint: The government doesn’t need it but they make millions of dollars from individual self-preparers because of innocent mistakes that cost tax dollars. The IRS very seldom returns money tax payers did not claim when they did their own tax return.
#3: Research Credits and Deductions Now
Especially if you do your own taxes, it’s important not to miss any credits or deductions that may reduce what you owe or bolster a refund. For instance, the $8,000 tax credit for first-time home buyers. Find out if you qualify for this and other credits sooner rather than later so you know what you’ll need to do to claim it.
#4: Organize Those Receipts
If you itemize deductions or have business-related expenses, it’s better to get your receipts in order now. Receipts scanning and organization service shoeboxed.com or neat receipts at neatco.com can help. And, if you’re having trouble juggling business and personal expenses, get a dedicated credit card for your business spending in 2011. American Express Cards are great for keeping track of business expenses, and will even issue year-end statements of all expenses, by category, for the year.
#5: Block Out Time to File
Filing taxes isn’t fun, and it always takes longer than expected. Don’t wind up filing at the last minute just because you couldn’t find time. Set aside time early to file your taxes. It may seem like a pain to schedule such a mundane task, but you’ll be happy when your return is filed and you can sit back and relax for another year.
Ready to start your return? Give us a call now. The Tax Guys 435-705-5101