We are now officially a few months into the tax season. Some of you may have filed your taxes already, but if history is any judge, many of us, myself included have not yet filed.
Filing taxes can be a huge pain especially if you have any irregular income or have had a job change during the year. This information is meant to help you get everything together and prepare to file you taxes, no matter if you prepare them yourselves or hire a professional.
If you have any questions regarding your tax information though, be sure to consult IRS.Gov or give the IRS a call. They aren’t as scary as you may think and I’ve found them to be rather friendly and very helpful when I have a question. If you have any doubts, don’t risk making a mistake and give the IRS or a tax professional a call.
The first thing to do when it’s time to do your taxes is make a list of all the tax documents you are expecting:
- Have all your employers sent you a W-2 or 1099 Misc tax form?
All employers are required to give you a W-2 form and the last date that these can be given to you is January 31st of the following calendar year. W-2 forms from 2010 must be given to employees by January 31st, 2011.
- Do you have record of your property tax information?
Depending on your state, the property tax on your home and vehicle registration can be tax deductible.
- Have your mortgage company and school loan holder sent you a declaration of interest?
Deduction rules are tricky, but generally you are allowed to deduct interest paid on a primary residence mortgage and one other mortgage.
College loan interest under $2,500 can be deducted. This deduction adjusts your income, and is not itemized.
- Have charitable organizations sent you receipts and statements of donations received?
Charitable donations to qualified organizations reduce taxable income. These deductions are applicable if you itemize your deductions.
- Have you sold any holdings in stock for a profit?
You have to pay taxes on any income you receive, and that includes income from a profitable sale of stock. If you sold for a loss, you should report that as well because it can be used as a deduction.
- Did you sell any goods online that were not taxed?
If you sell things on eBay, Craigslist or Amazon for a profit, you still need to pay income tax on those sales.
Even if you are having a professional prepare your taxes, having everything organized for them will save them time (and you in the long run) and help insure they don’t make any mistakes. I’m sure tax pros deal with all kinds, but I want to do everything I can to make sure they don’t get confused or frustrated which might cause them to make a mistake and me to get audited.
I’m no tax pro but to me, the easiest way to organize things is by how they appear on your required tax form. That way, as your tax preparer or yourself fill out your tax form for filing, you won’t have to go searching through things.
Make sure you have all receipts for claimed deductions and that you have documented proof of income, interest, losses and anything else you will be reporting on your tax form. If you don’t have proof, it didn’t happen in the eyes of the IRS.
Now that you are sure everything has arrived in the mail, you have all your forms, receipts, paperwork and everything is nicely organized, you can begin preparing your return or turn things over to a professional. Because you put in a little time working over things yourself before diving in, you can be more sure that your tax return will arrive quicker and there will be less likelihood of errors and red flags.
Do you file your own taxes or hire a professional?
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