I have certainly been guilty of filing my taxes at midnight on April 15th, but as I get older and my taxes get more complicated, I can’t afford to wait until March to start getting my taxes in order. Here are five things I’ve found helpful to start doing in January to ensure filing your taxes are as painless as possible.
Tax Tip #1: Make a Checklist for Collecting Tax Forms
If your taxes are simple (e.g., you have one employer and no investments, itemized deductions, or other income), you may just need your W-2 and form 1040EZ to file your tax return this year. Many of aren’t so lucky. You may have multiple W-2s, a half dozen 1099s, and myriad other forms coming your way in the next couple months. Make a list of all the tax forms you should receive and designate a place to store them as they come in. If you haven’t received a tax form you need in late February, call the issuing organization. Filing a return without a requisite form is a hassle and, while allowed, is not recommended. (Also, if you have moved since January 2008, be sure all the organizations issuing you tax forms have your new address!)
Tax Tip #2: Decide How You’ll File
Do you use TurboTax, an online tax prep program, a tax accountant, or good old paper and pencil? However you file your taxes, buy the software, hire the accountant, or get the paperwork you need from your local library or post office. This step isn’t that difficult, but it’s good to have it out of the way. Hint: TurboTax Federal Free Edition lets you prepare your federal return online for free. If you choose to print out your return and mail it in, then filing doesn’t cost you a dime! Learn more.
Tax Tip #3: Research Credits and Deductions Now
Especially if you do your own taxes, it’s important not to miss any credits or deductions that may reduce what you owe or bolster a refund. For instance, there’s a lot of discussion going on in the comments of my article announcing the $7,500 tax credit for first-time home buyers. Find out if you qualify for this and other credits sooner rather than later so you know what you’ll need to do to claim it.
Tax Tip #4: Organize Those Receipts
If you itemize deductions or have business-related expenses, it’s better to get your receipts in order now. Receipts scanning and organization service Shoeboxed can help. And, if you’re having trouble juggling business and personal expenses, get a dedicated credit card for your business spending in 2009. American express cards are great for keeping track of business expenses, and will even issue year-end statements of all expenses, by category, for the year.
Tax Tip #5: Block Out Time to File
Filing taxes isn’t fun, and it always takes longer than expected. Don’t wind up filing at the last minute just because you couldn’t find time. Set aside a weekend afternoon or long evening to file your taxes. It may seem like a pain to schedule such a mundane task, but you’ll be happy when your return is in the mail and you can sit back and relax for another year.
Ready to start your return? Consider using TurboTax Federal Free Edition.