Get a jump on your taxes...
Nobody takes in more money than the Internal Revenue Service -- and they do it without giving us any pleasure for our efforts! We can't make doing your taxes fun, but we can give you some tips to take the pain out of tax preparation. The key is to do a little advanced planning and organization. And if you know what information you'll need, it will speed up the process of doing your return -- and getting your refund!
Organize your papers and files. It's a good idea to have a system for managing your finances. It doesn't matter if it's simple or sophisticated, just that it's an approach you'll actually use. Many people like a basic three-folder system they keep up with year-round.
* Folder 1-Income: Salary, dividends, earnings, distributions, checking account interest; and don't forget the 1099 Form you got when you redeemed that savings bond.
* Folder 2-Expenses and Deductions: Make files for major categories like contributions, medical, and business expenses; put in canceled checks, bills, statements and receipts, mortgage statements, investment-related expenses, medical bills, child-care costs, and non-reimbursed business expenses for things like gas, food, and lodging.
* Folder 3-Investments: This can include investment account statements, 1099 Forms, and K-1 Forms for certain trusts or partnerships; ask a CPA or Financial Advisor for advice, as you should with all tax questions..
There are also some easy-to-use software programs. Just go online, search "tax preparation programs" and check out what's available.
Don't procrastinate. Get started now! Putting off preparing your tax return until April 14 is never a good idea. There 's a greater possibility you'll make mistakes. And if you're working with a tax preparer, that person may not have time to complete your return by the deadline. Even if you file for an extension, you'll still have to pay what you owe by April 15 to avoid penalties and interest. And if you're due a refund, you'll have to wait.
Use a professional. If you're overwhelmed just organizing your papers, hire a professional to do your return. This is an especially good idea if your tax situation is the least bit complex, including lots of investments, the purchase or sale of a business, or a 1031 exchange of property that defers capital gains or losses. Ask a CPA or Financial Advisor for advice.
Get free help from the IRS. Go to www.irs.gov and download IRS Publication 17 (2010): Your Federal Income Tax, available in both English and Spanish. This is the authority for answers to lots of tax questions. There's also a toll-free IRS TeleTax service at 800-829-4477 with recorded messages on lots of topics. Any other questions can get answers at the IRS help line: 800-829-1040.
Search around the IRS website. You'll find a truly mammoth site at www.irs.gov. It offers forms, instructions, and publications to download; you can find information on tax law, plus answers to frequently asked tax questions. The best way to navigate your way through all this is to click on "Site Map", "Individuals", and then "1040 Central" for a more manageable range of options.
So get started now! And good luck!