Last month, your mailbox was full of Christmas cards. This month, it will begin filling up with strange forms and statements from your employer, mortgage company, bank and health care providers.
Relieve your tax-time stress and anxiety by getting your statements organized as they arrive. The benefits of having all your information organized and filed early include peace of mind and an early refund from the IRS (if you're getting money back, that is). If you're expecting a refund, the sooner you file, the sooner you'll get your money. If, on the other hand, you find you owe Uncle Sam, this early warning will give you time to figure out exactly how you're going to come up with the cash.
Here are a few tips for getting organized and minimizing stress this tax season:
• Before W-2s, investment statements and other tax-related documents arrive, create a collection point, as simple as a large envelope or pocket file folder. Most of your documents will arrive in January and February. These statements are important because the IRS gets a copy of most of them, so figures on those statements are necessary to ensure your return passes safely through the system.
• Track down Social Security numbers. Before the IRS will process any return, they must have your correct Social Security number, as well as your spouse's if you file jointly, and those of any dependents you claim. Last year's tax return is always a good starting point.
• Calculate the amount you donated to churches and charitable organizations in 2009. Keep receipts from these donations with your other tax documents. Don't forget to look through your checkbook for records of contributions you made to churches and charitable groups.
• Determine which preparation method fits your personal style. Are you going to do it yourself or should you hire a pro? Do you prefer software and a computer or pen and paper? Now's the time to decide. By starting early, you have plenty of time to gather filing paperwork, pick the perfect tax preparer or find the software that fits your needs.
• If you pay a professional to do your taxes, call to schedule your appointment as soon as your documents are organized. Preparers will get progressively busier leading up to the April 15 deadline, so the sooner you call, the earlier you can get your taxes filed.
• Whether you file via paper or software, this year, have your refund check directly deposited into your bank account.
Tax filing makes everyone a little nervous, but when you start early, you've got time to get the answers and make sure you're taking full advantage of every tax break for which you're eligible.
Don't get in such a hurry to file, or to find ways to cut your tax bill, that you fall prey to a tax scam. If you get organized and file early, you'll thank yourself later - plus, you'll no longer dread the coming of April 15!
Steve Bates founded Bates Tax and Accounting after working for a Big Four firm, Louisville's largest public accounting firm and a Fortune 500. He now specializes in personal and small business services. For more information, visit BatesTax.com or call Steve at (502) 526-5990.