Income Tax Preparations

Get ready for tax season

by Maribel Sicat

Tax season is coming up. Are you prepared? If you are like most average families, your receipts are either bundled in shoe boxes, Ziploc bags, envelopes (hidden in folders of folders), or missing (in the trash or it is unreadable the ink smeared). By organizing your receipts, you can determine whether to file by the standard or itemized deductions method.

Following are some tips to organize:

  • Label each manila folder or envelope into different categories: medical, mortgage, bank/ investments, tuition, charitable organizations, work-related expenses, and business-related expenses.
  • Sort your receipts into separate manila folders (or large envelopes if you don't have that many expenses).
  • Under each category, list the items on a separate piece of paper as your "reference" sheet. (For medical receipts, it would be easier to separate the prescription receipts from the other medical fees. If purchasing work or business-related items from places, which generally do not provide receipts, such as a swap meet or moving sale, ask the seller for a generic receipt if available or log it in your list. Please be honest in what you list).
  • Insert the "reference" sheet into the appropriate folder or envelope.
  • Place these files into a storage box and label it "2008 tax info". Store it in a secured place.

If you use your personal vehicle during working hours, have a list of in/out miles driven to the designated areas, date, and name of location. Commuting miles between home and work are not deductible. However, it is part of the calculation to determine the actual miles that are deductible.

Interested in filling out your own tax return? Check out http://www.irs.gov to download your Federal income tax return forms and schedules. Depending on your state (few states are tax free), check with your local tax department for the required State forms and schedules you may need. Use your legal name (as found on your social security card). If you need to change your name, go through the Social Security Administration first before filing your taxes.

Consider a tax professional if you do not have the time to sort through records or own a business. You may have to do a little research to find a tax professional that fits within your budget as some fees vary (hourly rate or flat fee). Ask if the fee include all the forms and schedules you need. Additional costs may apply for bookkeeping service (to organize your records) or audit representation. When submitting your paperwork to the preparer, inform the preparer if you are missing a document such as a 1099-MISC or W-2. Your preparer will advise you on what your next step will be. By not reporting any missing documents by the deadline, the IRS (and State tax department) may impose additional taxes and penalties on your return.

Check with your local IRS office for free income tax preparations (for families with low-moderate income). Most companies offer free Federal filing online, but there is an additional fee for the State. As with all online tax preparations software, you will have to do the work yourself. Online tax software companies offer technical and customer support to answer any tax questions you may have during the process. Other online companies supported by CPAs help provide audit representation. It is also a good idea to do business with your local tax preparer if you prefer face-to-face consultation.

To help lessen your stress for the next tax season, consider preparing your next year's "tax info" box.

Advertiser Links for investing information [what's this?]
Unsubscribe
First Name:
Last Name:
Email Address:
ZipCode:
Send me info from partners: