Taxes strike terror in all of us! Not only are many papers included in the process, we have to make time to organize the information. Use these timely tax tips to get control of this project.
Create a master file for all tax related papers
Even before your 1099 papers arrive, start a master file using an expanding red folder and manila files. Label the files with the important tax categories –W-2 information, interest and dividend income, capital gains and losses, charitable donations, medical and dental expenses, deductible business expenses, and miscellaneous deductions (educational expenses, safe deposit boxes, financial planning). If you want to make it super simple, just have two categories of income and expenses. Even before your papers arrive, this file will be their “home” and papers will not get lost! And to prepare for the current year, begin a master file for incoming documents for the current year, so you will not have to search for them at this time next year. You can use an accordion file for these documents which will be compact and easy to store!
Set aside time on your calendar to collect tax related information
Mark your calendar for two, 2 hour tax sessions to file your documents in your master file. If your accountant has sent a workbook, fill it in as you go along. Partner with your spouse to work together, and then have a reward for your hard work! Finalize before March 15 so you are ready to file!
Use technology as your assistant
Financial software can rescue you from your tax nightmare! Beginning this year, load Quicken on your computer! Enter your checking information using the pre-set categories, and Quicken has tax information categories set. So as you pay your monthly bills, you are also categorizing items for your taxes. Simply go back to the program and create your tax information with a click of the mouse!
Nothing is more of a nightmare than to have finished your tax work, and then to stand in the long line at the post office! File electronically with the IRS, and upon receipt, you will receive confirmation!
Remember, the earlier you file, the earlier you receive that wonderful refund check! If you owe taxes, you will feel better if you complete your tax work, and know the amount due.