It’s time to start thinking about getting those taxes done. Maybe you’re in a panic. Not to worry. Just follow Schnepper’s 15 steps to getting your taxes done, and you’ll be much happier. Ready? Here they are:
Get serious. Unless you’re focused, you’re going to see that receipt six times rather than the once you need. This is all mental now. Schedule a time to get to work and commit to that time…
Get organized. Something has to go on those returns. Get your W-2s together to report wages, your 1099s to report interest and dividends, your 1099Bs for reporting stock and bond sales, and your 1098s for deducting your interest and taxes. The Internal Revenue Service and your accountant both want final numbers. It makes it easier for them and less painful financially for you. Bring either one a shopping bag full of receipts and you’re going to feel the pain . . . especially in your wallet.
Get informed. Have you been following all the changes the U.S. tax code has seen in the past decade? How about the multiple new tax bills passed just last year. You can now deduct the sales tax you paid in 2009 on a new car costing as much as $49,500 and as much as $500 ($1,000 on a joint return) in real estate taxes paid on your home even if you take the standard deduction! Got a kid in college? Have you used the “tuition and fees” deduction that lets you deduct as much as $4,000 in tuition and fees off your 2009 taxes?
Even better, have you looked at the new American Opportunity Tax Credit, which can give you as much as $2,500 in tax savings? If not, get educated! While you’re getting enlightened, don’t neglect the new tax credits on energy-efficient improvements to your home. And if you’re a new home buyer (one who hasn’t owned a principal residence for the last three years), you can get a refundable credit of 10% of the purchase price, up to $8,000, on a new principal residence. If you’ve been in your home for five of the last eight years, you can purchase a new principal residence and qualify for a 10% credit of up to $6,500.
If you’re “tax simple,” the IRS can actually do the return for you, or you can have your return done online — sometimes even for free. Alternatively, if you’re tax-savvy, do your own return after learning the new rules.
A good place to start: the IRS’ absolutely free Publication 17. It’s hundreds of pages of everything you need to know about your 2009 tax return and your planning for 2010. If that’s too much, go to a professional.
Get help. You might remove a splinter from your own finger, but you wouldn’t perform heart surgery on yourself. A trip to a tax professional should at least tell you what you’re missing. Don’t hesitate to ask for help; it’s deductible. But call for an appointment now! The later your accountant does your return, the more tired that tax preparer will be. You want your return done when she’s at her best.
Get exemptions. For 2009, you get to take off as much as $3,650 from your income for each qualified exemption you have, up from $3,500 in 2008. (The level remains at $3,650 for 2010.) Despite myths to the contrary, these include children who are full-time students under age 24, regardless of how much income they may have. As your income increases, your exemption deduction may decrease. For 2009, on a joint return, your exemption deduction will be phased out between adjusted gross income of $250,200 and $372,700. For singles, the numbers are between $166,800 and $289,300.
Get filed. None of this matters if you don’t actually get your return to the IRS. If you owe money, there’s interest and penalty for not filing, in addition to interest and penalty for not paying. You’ve done the hard work, now get it off your desk! Or file for an extension.
Get receipts. If you filed on paper, get a receipt. I always mail my returns certified, return receipt requested. If the IRS doesn’t get your return, it wasn’t filed. It may have been lost in the mail or lost by the IRS itself. But unless you can prove that it was filed, if the IRS doesn’t have it, legally it wasn’t filed. Prudence today can avoid disaster tomorrow.
Get planning. It’s not too early to start your planning for the 2010 tax year. You can check out tax brackets, standard deductions and exemptions for 2010 here. Once tax season is over, your financial adviser is going to have the time to review your wealth accumulation strategies. Don’t put it off. People don’t plan to fail; they merely fail to plan.
Article by Jeff Schnepper, MSN Money, Original article here
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