The new year has just begun and we are forced to re-examine last year already. Yes, it's tax season! I personally abhor tax preparation and all that goes into it. I would love an easy to calculate flat tax (hint, hint politicians) because it is so time consuming to prepare a return, even if your return is not overly complicated.
One thing that I do each year at the first instance of a tax form coming in the mail is to start a huge mailing envelope as the home for all of the previous year's tax documents. This makes it easy to just shove any tax documents in as they come in, and when the taxes are finally finished, the envelope is large enough to contain a folder full of the organized mess that I call tax returns.
Another thing I do to get ready to do taxes is pull last year's return and review it before I even think about starting the new return. Why? Because it helps me notice if I'm missing an important 1099 or if the charitable contribution statement I receive from my church is markedly different than the previous year or in line with what I had estimated our contributions to be. I have had times where donations weren't correctly posted to my account, so I compare their statement with a report I run from my accounting software. Another reason to pull last year's return is that I honestly don't know my children's Social Security numbers and those important documents are located in a safety deposit box at the bank. I know I will need to have their SSN's handy to prepare a new return, plus if you e-file, you typically need your AGI number from the previous year anyway.
You can also consider writing a list of documents you do expect and checking them off on the outside of the envelope you've started for tax related documents. That way, you'll have a general idea of what is still outstanding. I have had, in the past, companies send tax documents after the deadline prescribed by law. You don't want to forget something and have to amend a return.
I also request a log from PayPal now because it provides me with information related to income derived from this blog. It isn't an automatic gimme - you receive an email after they compile that for you, so be sure to request yours sooner than the night you plan to do your taxes.
Is there anything special that you do for your taxes? I am always looking for organizational tips. Last year, I cut some folders a la a lap book and organized everything easily by category because I actually visited an accountant for a little tax help and wanted to waste as little of his time as possible by having everything super organized.
2 comments:
girl I am so worried about taxes this year. THis is the first year that I have REAL income from my blog to claim. How do I request that log from paypal? If you see this you can just email me the answer...LOL. If not I'll email you later. Thanks for this article!!!
Yeah, not everybody's a big fan of preparing for the tax season. I actually compile all my tax mails in a big envelope too. The checklist makes the deed easier, as you can always keep track of all the documents you need with it. And using a reliable accounting software to double-check data is a good way to get a glimpse of what to expect with your taxes.
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