Monday, January 16, 2012

make yourself useful and...

get a jump start on your tax returns.

you know what a pain it is to wait until april, or even march to try to get an appointment with a tax prep service or CPA. you know what a bother it is to have to sort through piles of bills and mail to find everyone's W2's, 1099's, etc. i say, get yourself started right now. it's not hard to be prepared since you know what you'll need. all agencies have to send out any and all tax forms by the last week of January, so you'll get them by the end of the first week of February at the latest. but while you're waiting for these forms to flutter into your letterbox, here's what you can do to prep:
1. find a file folder with pockets. put anything tax-related into that folder. this includes all of the deductions for which you should have been keeping receipts throughout the year, including but not limited to church and charity donations, goods and clothing donations (you MUST have a receipt for these as well now, so dumping them at the bins will not earn you anything except a gold star for the day), and the like. also look around and find your medical bills and receipts, if you plan to itemize. remember to keep your mortgage statement (1098), which includes your interest paid and your real estate taxes paid. in most cases you can deduct these, as well as interest paid on student loans.
2. figure out how you'll do the taxes, or who will do them for you. if you plan to use a CPA or a tax service, ask around for recommendations. if you want to do them yourself, consider whether you'll use an online service or file a paper return. if you want to do them online, do a little research. some services offer more perks than others, such as live chat or phone-in for questions, but you may pay a premium (still not as much as you'd pay to have someone else do them though, usually). the paper forms to file can often be found in your town library. mine has a tax display out front, and free tax help for seniors. if you qualify, take advantage of these programs! and remember, the more difficult your return (if there are special circumstances like rental property income, dividends and sizable interest payments, self-employment, child support issues or what have you), the more you may want to consider talking to someone who is a professional and can help you make all the right moves.
3. check the internet for tax tips and free estimated tax calculators. tax laws change constantly, and you may be able to claim more (or fewer) deductions than the last time you filed. H&R Block has a nice tax calculator (here) for those who would like to figure out if they may owe or be entitled to a refund. it's not exact, but it's nice to know and gives you a jumping-off point.
4. continue to collect things in your tax folder, and remember to hold onto it for at least 5 years, in case the men in black come a-knocking. you'll have to show the back-ups for any claims that you make in case you are audited in the future.
5. eventually, do (AND FILE) your taxes. i like to wait until february, but that's just me.

remember, i am not a tax expert, and this isn't really even advice in the strictest sense. i'm just a girl who has done her own taxes since she was 14 (yes, 14...i got a job as soon as i could and tried to get as much back from my taxes as possible). so get on it, and get it done. you'll feel better, i promise. unless you owe money, in which case i'm sorry i reminded you.

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