More Organization = Less Stress During Tax Season
ARA) - If the mere thought of April 15 gives you heart palpitations, chances are you aren’t as prepared as you should be for tax time. Having all the necessary paperwork and information in front of you when you’re doing your taxes, or having that information ready to pass on to your accountant, can make tax season much less stressful.
If you’re already organized, the information below may spark some ideas on how to do even better. If you’re drowning in a sea of unorganized paper, take heart from the fact that these suggestions will make next year’s taxes that much easier, and may still help salvage this year’s.
1. Make time for taxes. It sounds basic, but you need to set aside a chunk of time designated for taxes. You might even want to break up the time into manageable tasks. For example, on one day, schedule half an hour to gather up all your receipts and financial documents. Give yourself an hour on a subsequent day to organize the receipts. And don’t forget to set aside more time than you think you’ll need to actually do your taxes.
2. Hunting and gathering. If you’re methodical by nature, this part of tax time will be a breeze -- you’ll simply head to your files and find everything you need. For the organizationally challenged, this process may be painful. You need to find all those tax forms that you know you saw in your mailbox, but haven’t seen since, not to mention receipts, W-2s and other important papers.
3. Get organized. Once you have all the necessary documents in hand, sort them into appropriate categories: tax forms, W-2s, medical expenses, charitable deductions, investments, etc.
4. Take advantage of all legitimate deductions. Mortgage interest, home equity loan interest, home office deductions and child tax credits are some obvious write-offs. If you have questions, it may pay to invest in professional advice.
5. Pay up. If the bottom line is that you owe the government taxes, but you don’t have the cash on hand, don’t panic; you have a few options. Consider paying in installments, paying by credit card, or even requesting an extension. To use an installment plan or get an extension, you still need to file the correct forms by April 15. Before using your credit card to pay, get a copy of your credit report from a service such as experian.com to make sure there won’t be any surprises affecting your credit.
6. Use your return wisely. If you are getting a refund, take a minute to decide how to use it. While the temptation is to consider it “found” money, resist the urge to spend it on a trip or a new sofa. Instead, why not invest it or put it in the bank? If you are carrying credit card debt, apply the amount of your tax return to paying off what you owe.
7. Plan for next year. If you spent way too much time getting your information in order to do your taxes, make it easier on yourself next year by starting a filing system now. Many people choose one credit card to use for most of their purchases throughout the year. That way, by saving your credit card statement every month, you’ll have a complete record of your expenses.
8. Is it time for a change? If you owed Uncle Sam money this year, or if you have a huge return coming, you need to adjust your withholding. While getting a refund may seem like a good deal, the goal should be to break even. If you’re getting a refund, you’ve basically been loaning the government money -- without interest. Increasing the allowances you claim so less is taken from each paycheck means more money in your pocket each month. If you owed this year, decrease your allowances so more money will be withheld from your paycheck and you won’t have the same unpleasant surprise next April.
9. Tax time is a good reminder to check your credit report and make sure you’re on track with your financial plans. Look for obvious mistakes on your report, such as credit card accounts that aren’t yours and closed accounts that have not been used for more than seven years, but are still showing as open. If you find inaccuracies on your credit report, you should take steps to correct that information.
For more information on checking your credit report, visit www.experian.com.
Courtesy of ARA Content
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Source: ArticleTrader.com