Are You Ready for Tax Season?
Tax statements and reports from employers, charities, financial institutions and investment brokers have been coming to your mailbox all month. If you start organizing now, it will not be as difficult, demanding or stressful to get your filing done on time! The following steps will help ease you into the process.
First, make a folder to hold all of your tax information for 2012 and go ahead and make one for 2013. At this point you can put 2013 in the filing cabinet! Your 2013 file will be used to collect receipts and other tax related documents throughout the year. (This will help you skip this step next year. Tax preparation and organization is easiest if you prepare all year long). Gather any and all reports you have received such as W-2s, 1099’s, and donation receipts and put them in your 2012 file. If you think you spent over 7.5% of your income on medical expenses, go ahead and collect those receipts too. If you are a business owner or contractor, put your business and professional accounting files with your tax information.
Second, separate all the statements used to report income (W-2’s and 1099’s) from the deduction statements. By January 31st, you should have received statements and reports from every employer, financial institution, investment firm, and charity you worked with in 2012. A good way to ensure you have received statements from each company is to pull out your 2011 return. Most people donate to the same charities, live in the same place, keep investments with the same brokers or advisors, and work for the same employers from year to year. So, your previous return is a good tool to use to verify you have received all of your statements.
The deductions portion of the collection process can be daunting to some people. Just remember that this is where your work can really pay off by adding to your refund or reducing what you have to pay. Track down your charity receipts for donations of cash, clothing and household goods. You can also deduct mileage to and from volunteer jobs (at $0.14 per mile), your mortgage interest on primary and secondary homes, property taxes, heavy medical costs, sales tax, tuition, etc. If you are unsure on whether or not something is deductible, go ahead and include it in the file. Do not let your indecisiveness slow you down at this point. You can always ask an accountant about the receipt later, but you will not remember to ask if it is not in the file.
The third step is to ensure you have the social security numbers of all dependents. If you added a dependent to your home in 2012, you will need to get their information. If you paid someone to watch the kids while you worked, be sure to get their tax identification number. It will be necessary to provide this information to get the related tax credit.
The fourth step is for people who work from home. If you fall into this category, gather all the information regarding your office and equipment used to do your work. This includes the square footage of your office, phone bills, internet bills, electric bills, etc. It may also be helpful for you to gather any information on computer equipment and office furniture you use for business purposes.
Spending the time to get your papers in order now can really pay off in a number of ways. Even if you are dropping off your information with an accountant to prepare your return, getting organized early will benefit both you and the accountant. It will reduce the stress and panic associated with having to find everything at the last minute. You will be able to determine if you need additional information, and you will have time to obtain it. You could prepare your taxes early and know if you are going to get money back or pay additional taxes. If you prepare the return on your own and you run into a problem, you will be able to ask a professional. The benefits of putting your information together now will make a far less taxing tax season.
Sara Genrich, Configuration Connection - www.configconnect.com