Preparing for Taxes
Your 8 Step Tax Preparation Checklist
Tax filing time doesn’t have to be so taxing. By taking a couple hours right now to organize your finances, you can coast into the tax deadline with plenty of time to spare and, very likely much more money in your pocket. It is estimated that, people who wait until the last minute to organize and file their taxes miss out on hundreds of dollars in valuable deductions and increase their chance for error by 50%. Take these steps now and through the time you file your taxes:
- Check your tax withholding today. Don’t keep giving the IRS tax-free loans with big refunds.
- Know your tax bracket. By staying on top of your income bracket, you can make necessary adjustments in cash flow and withholding now and reduce surprises later.
- Know your credits. You may be eligible for any number of tax credits. Child care, education, energy and other credits abound. Look ahead so you can take advantage throughout the year.
- Organize your tax documents. Best to devote at least one drawer of a file cabinet to nothing but taxes; prior year’s returns and all tax-related documents.
- Set up an accordion file, by month, for all receipts and invoices. If you have never itemized your deductions, this may be the year. Don’t miss out.
- Set up a separate accordion file if you operate a business. Do not comingle business and personal documents!
- Computerize your finances. Software programs, such as Quicken, will enable you to keep a running account of your cash flow and help you stay on budget. It’s integrated with your bank accounts and can upload everything you need into a computerized tax filing program. Huge time savings!
- Schedule it. Once you’re organized, it should only take a couple of hours to prepare your return. Schedule the date. You are now in control. No need to put it off anymore.