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I realize we’re still three months away from the deadline for filing 2009 taxes, but the beginning of a new year is the perfect time to begin preparing for the following year’s tax season. Coming up with a plan now and staying organized throughout the year will eliminate most of the pressures associated with filing taxes. These few steps will ensure you don’t miss anything and keep the auditor at bay.
Get Organized
The first and arguably the most important step in preparing for tax season is to get yourself organized. With the majority of your required documents available online these days, the process has simplified.
Create a new folder on your computer for storing all of your required paperwork, including charitable giving, business expenses, etc. Because we’re not entirely paperless just yet, you’ll also want to get actual folders, organized by category and stored safely somewhere, and add documents to them throughout the year.
Determine What Information to Track
Now that you have folders prepared and file cabinets full of space, decide what documents you’ll use to fill up that space. Once finalized, you’ll want to keep your old tax returns in a safe place. Ensure you have your personal information as well as that of any other individual you’ll be including on your tax forms, including social security number, relationship, etc. If you plan to itemize your deductions, save all relevant receipts. You’ll also want to be certain to keep records on your mortgage information.
Limit Your Tax Refund
As exciting as it is to discover Uncle Sam owes you a large refund, it’s actually not in your best interest to receive one. If you consistently receive significant money back after filing your taxes, you need to adjust your withholdings. Otherwise, you’re giving the government an interest-free loan for the year. Remember, the money you get back in the form of a refund was your money to begin with. You simply paid out too much throughout the year. Gradually, update your withholdings each year until you find a good balance of either owing a small amount or receiving a small refund.
It’s still not a joy, but by following these simple tips, at least you won’t be scrambling around on April 15 trying to finish your taxes.
