Wednesday, January 30, 2013

How to organize your tax records now

Don't let your tax records look like this.
(MoneyWatch) About 160 million individual tax returns will be filed this year, and over half of these will result in a tax refund. The average refund last year was about $3,000.

Whether you'll prepare your own return or use the help of a professional, the first thing you need to do is to get your tax information organized. Here's a checklist of the tax records that you'll need to gather:
- Your 2011 federal and state income tax returns
- Checkbook register and checking account statements for 2012
- Copies or images of canceled checks
- 2012 pay statements and W-2's
- Forms 1099 issued by bank and investment accounts
- Year-end mortgage statement
- Property tax receipts
- Receipts for expenses that may be deductible (see "itemized deductions" below)
- Financial and investment property records

Organize it. Use a filing system organized by category that includes folders for bills, tax documents and statements. Then put the filing system to use by filing your tax information and statements as these come in rather than letting them pile up on the counter or desk. I like to use a separate multi-file box for tax return and related statements for each year. These come preset for this purpose, and you can find them at Wal-Mart, Target and Staples.

Close out your checkbook register for 2012 and start a new one beginning January 1. File the register from last year with the 2012 tax information.

Deduct it. If you think you may have some expenses you paid that can be claimed as deductions on your tax return, then review a copy of Schedule A - Itemized Deductions and applicable instructions. Do this before you sit down to prepare your tax return yourself or with a professional. The major categories of expenses that may be deductible include:
- Medical and dental expenses
- Taxes paid
- Interest paid
- Gifts to charity
- Casualty and theft losses
- Job expenses
- Miscellaneous deductions

According to tax filing reports, the two biggest categories for which people miss claiming deductions is interest and taxes paid. Over 60 percent of the returns filed by homeowners omitted deductions for mortgage interest, real estate taxes, and state and local income taxes.

Also, remember that if you refinanced a mortgage, get a copy of the HUD-1 Settlement Statement. This includes any interest and points paid that may be deductible.

Read the rest of the article by clicking here.

These posts are for informational use only to educate people about their online income taxes and the financial world around them. If you found this helpful, share the original article or this one, and help spread the word! With tax season rapidly approaching let us get you the best income tax return you can possibly have by e-filing! Leave us a comment if you want to share your opinion.
 
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3 comments:

  1. Every year millions of people return their tax. You have discussed in this blog that a professional is required to make the tax filing process simple. But now you can fill your tax form without any professional because w2 filing software makes our tax filing easy and fast. We need to put only basic information and rest is filed automatically by electronic software.

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    1. Thanks for your comment, Welyam.

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