Ready or Not, Here Comes Tax Time!

Whether you prepare your taxes or take them to an accountant or professional preparer, there are steps you can take to make the process easy and painless, or at least easier, for all involved. I am a truly lucky woman. The really great man I married is a CPA, so I have not had to worry about the paperwork of filing taxes since we got married. That same great guy also agreed to answer my questions this week about organizing tax papers for my blog (he is a giver like that!).

If you’ve filed your 2011 taxes already, pat yourself on the back, then skip to #4 and #5 to see how completing your tax return next year can be even easier.

1. Start with last year’s return. Look at the order of last year’s return, then collect and organize your information in the same order. This is not a complete list, but it should get you started.

• W-2s, 1099s and K-1s
• Cost basis information for investments sold
• Student loan info
• Real Estate Taxes
• Mortgage Interest
• Charitable Contributions
• Union Dues
• Unreimbursed Work Expenses
• Childcare Expenses
• Last pay stub of the year
• Receipts for items if you plan to itemize
• Bring information for any new life situation, like birth certificates and social security numbers for children born in the tax year. 
• If you have made any major purchases or sales this year, like buying or selling a home, major investment or business, collect the pertinent paper work for your use or to take to your accountant appointment. 
• You are responsible for this process. If your taxes are professionally prepared, your preparer is responsible for asking thorough questions, but you supply the answers and the information.

2. Get ready, Get set, Go! You can start your forms even if you are still missing one or two pieces of information. Start with the information you have, even if you are waiting for a final number or detail, and then complete your return when you receive that last detail. This avoids panic mode at Apr. 15 looms closer, and it also gives you at least an estimate of what your taxes may be, and if you will owe money or receive a refund. An incomplete picture is better than no picture at all.  

3. Don’t delay. Period. Perfectionism and Procrastination are not your friends.  Do yourself and your preparer (and their family) a favor. Delaying the process makes it more difficult, just Do It. 

4. Give your papers a home, to make next year even easier:

1. Have a hanging folder called “Relevant Tax Info, 2011” or 2012, etc).  Keep it close at hand.  I prefer hanging folders because they are easy to drop information into.  
2. Within the larger hanging folder, have 3 or more manila file folders.  Title them something like:
   • Items I Know Are for Taxes for charitable donation receipts, sale and purchase information, taxable transaction information, etc.
   • Items I Need to Ask About for items you want to ask your accountant or preparer about that may impact your taxes
   • Receipts for Purchases you can claim, like business expenses.
3. Add relevant tax information to this holder throughout the year, as it occurs. 

5. Buy A Shredder. Once your taxes are filed for 2011, you can go back (with your preparer’s blessing) and shred tax returns that are more than 4-7 years old (again, ask your professional for suggestions). Shredding is the only safe way to dispose of those old, unnecessary tax returns.

You can do this, friends, and you’ll feel great when your taxes are filed! A big breath of relief, then move on to something else!

If you still haven't filed yet, See if you meet the requirements, then call for an appointment.

This is part of the Feb. 21 edition of Colleen CPO's Blog.