Save money and stress by using these quick tips to get started on your taxes. Tune up your own paper filing system or use the filing system kits to make sure this year is better than last April 15!
Tips to simplify your tax return:
1) Get a file box or file box to hold all your tax related files and forms from past years.
2) Write the year, start date and initial check number on the outside of your check register. If there is more than one, number the records to make it easier to find the correct one. Complete records go in your tax box each year.
3) While sorting your mail, place all 1099s, W-2s, and any tax related materials in your tax box. Use colored accordion file folders in your “tax box” for incoming tax documents.
Have a good filing system, but get stuck on old records?
4) Get financial records for the last few years, any business expenses, proof of income, and any tax related items.
While taking out the old files, make new replacement file folders for all your regular household and business or personal financial and legal documents.
If you don’t have a working filing system for your home or business, I recommend that you sort last year’s documents for tax and filing after setting up the FileSolutions ® color-coded preprinted filing system kit for this year that fits. to your needs. You can check out the home and small business file kits at the following link in the author’s resource box.
Computer tax preparation tips:
5) With tax preparation software, you can finish your federal and state returns in about 90 minutes, if you’ve completed the steps above. I use TurboTax to do my own taxes. Then, I have my return verified by a tax professional for less money than it would have cost me to have my taxes fully prepared by a CPA.
You can use Intuit’s TurboTax program online for FREE if:
• You qualify for the Earned Income Tax Credit
• Or you were 62 or older
• Or you were 22 years old or younger
• OR You served in active military service (including reservists and National Guard).
If you are used to HR Block tax preparation, they have an online program or software that you can use to do your taxes. Both HR Block and Intuit provide free electronic preparation and filing for simple filings (used with W-2s).
I do not feel comfortable publishing my private information during the time it takes to prepare my return. The sense of security I get knowing my information stays on my own computer is worth the $29.95 TurboTax fee and I can still file electronically.
6) On the other hand, my favorite CPA recommends filing your taxes electronically. This saves paper and long lines at the post office on April 15. Both the filing service provider and the IRS review the return for errors when you submit it. He then corrects it and resubmits it without penalty.
Computerized Accounting Program Tax Tips:
7) Regardless of the financial software you use (Quicken, QuickBooks, Microsoft Money), print out your last year’s record. Add it to your tax records the same way you would your checkbook records.
8) MAKE A BACKUP COPY of your year-end accounting data.
Make a backup copy of the software itself from your original installation CDs and store it in the same box where you archive your data. This is essential if you upgrade your financial software or switch from one program to another.
9) My financial advisor recommends printing the reports you use for taxes and checking for errors or missing deductions by tax category. Catching bugs and fixing them is now much easier than it was on April 14!
Tax tips after April 15:
10) Separate and place all current and past tax related files in file boxes. Check each box filed abroad by fiscal year(s). 11) Put a hard copy of your calendar/agenda and phone message book in the tax file box; everything is proof of commercial use.
12) Place file boxes with prior years’ records in storage after placing all related tax supporting documentation. Include a copy of the tax return itself, as well as forms 1099, W-2, etc.
Use these tips and you’ll never end up saying, “I can’t stand to do my taxes in this same crazy way ever again!” Less aggravation means fewer mistakes and a better outcome, even if you pay the taxman instead of getting a refund.
Additional special tax tips throughout the year:
Select which credit cards you will use for business, home and personal only. Keep a card for web transactions only. Keeping only one credit card for web use limits your exposure to fraud.
At the end of the month, use your credit card statements, auto/transaction register, and checkbook to keep track of expenses in your general ledger or computer program instead of chasing down all the receipts. Between that and your bank statements, you’ll get a quick review of your current month’s financial status.
Keep a transaction log for automobile mileage and miscellaneous transactions. You must have a record to deduct car expenses, and if you have a record, the IRS does not require you to keep receipts for expenses less than $75.00.
You can easily set up your handheld device (eg Palm Pilot) with an Expense Notes section to record your business expenses. It’s up to you to qualify for as many small business deductions as possible!
Copyright 2010 Eva Abbott All Rights Reserved.