Tips for Tax Time

I spent much of today trying to gather all of the records from 2009 to expedite the filing of taxes. while I’m still waiting on several pieces of info (like 1099’s), I find that breaking up the gathering and collating of tax info helps to make it a bit less onerous.  I used to outsource my taxes until I found several errors in a return prepared by someone else, and have been doing my own (which includes schedule C’s for self-employment income) for several years.  Here are some tips to help organize and make sure that your taking advantage of the deductions or refunds owed to you:

–Good software helps to simplify things — I use Turbo Tax, although my understanding is that among the top software brands, most are fairly similar from an ease of use standpoint.  The software helps to demystify the arcane language of the tax form, but it maintains the information and creates a nice finished copy.

–If you use external help, ask questions – a good accountant should review the return with you and help you to understand various things including deductions (like IRA contributions) that you’re eligible for and thresholds like the amount of estimated tax you need to pay to avoid penalties. Turbo Tax also has a community board where you can post questions as well.

–Use tools to help organize your info and receipts — I rely on credit card annual summaries and downloadable excel files. There are now a number of free sites that help you to organize your financial activity into categories.  Not only is this good for taxes, but it is also helpful for budgeting and planning.

–Don’t put off filing until the last minute — once you receive all of your statements and information, it’s better to try to break down the task into multiple parts and take on a bit at a time.  This will help to alleviate the panic with tax deadline approaching.

shared at Works for Me Wednesday, Frugal Friday