Its that time of year again for tax preparation. This can be very overwhelming and very stressful! Here are a few tips and resources to get you through.
- Start with baby steps and early March is the best time to start.
- Set up sessions for yourself for one or two hours at a time so you can work efficiently.
- Write your sessions in your calendar and have a deadline well before April 15.
Not sure what to gather? Everyone has different items to gather, but generally these items are the following.
- Income includes your W-2 and 1099’s. These come in envelopes marked Important Tax Document and will be easy to find in your mail. Or these can be found online from your employer or in investment accounts. You may have already set up ways to find these documents easily online!
- Expense/Deductions include home mortgage interest (From 1098), property taxes paid to your school district and county, and charitable contributions. Property taxes may be escrowed in your mortgage, and you can find these payments listed on your monthly December mortgage statement. Charitable contributions can be found in reviewing your checking account online. Non-cash charitable contributions can be valued with ItsDeductible.com online too.
File online for the quickest return. Keep your filed return forever, either on paper or electronically. Ask your accountant how long to keep the preparation documents. There is differing advice on this but most say at least 3 years. Get ahead for next year by setting up folders to use throughout the year for income and deductions.
You and Your Federal Return
Smead Tax Organizer
AARP Top 10 Filing Tips
AARP Tax filing assistance
Maximizing your medical deductions
If you are paralyzed about tax time, here are a few ways to get started and unstuck.
Items you can get off the internet if you don’t have the papers you need.
- Use your year end credit card statements. These are already categorized for taxes.
- Go online to your mortgage company and download your mortgage expenses and property tax for your 1098. Property taxes and mortgage expenses are the biggest deductions in Texas.
- Use your online pay stubs to find the taxes you paid on your final paycheck for 2010.
- Visit your online banking and print statements out needed for income and expenses.
If you have papers, but are overwhelmed and not sure where to start.
- Go through your papers and mail to find all the 1099s, 1098s and any other envelope marked important tax document on the outside of the envelope.
- Spend one hour sorting income and expenses. Spend 30 minutes sorting income into interest and dividends and then stocks for capital gains. Spend another 30 minutes sorting medical into doctors/dentists, labs, eyeglasses, out of pocket and deductibles. Spent another 30 minutes sorting charitable deductions. Spend another 30 minutes using ItsDeductibleonline.com to tabulate your charity non cash donations. Finalize with 30 minutes of wrap up.
- Group your credit card and other receipts by categories for your small business, such as advertising, meals (with the name of who you worked with and the work you did written on the receipt), office supplies, mileage and educational expenses.
The hardest thing about taxes is getting started! Just do it, jump on it, get help with a professional or tax software, and you will be very glad you did!