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More Organization = Less Stress During Tax Season
(ARA) - If the mere thought of April 15 gives you heart
palpitations, chances are you aren’t as prepared as you
should be for tax time. Having all the necessary
paperwork and information in front of you when you’re
doing your taxes, or having that information ready to
pass on to your accountant, can make tax season much
less stressful.
If you’re already organized, the information below may
spark some ideas on how to do even better. If you’re
drowning in a sea of unorganized paper, take heart from
the fact that these suggestions will make next year’s
taxes that much easier, and may still help salvage this
year’s.
1. Make time for taxes. It sounds basic, but you need to
set aside a chunk of time designated for taxes. You
might even want to break up the time into manageable
tasks. For example, on one day, schedule half an hour to
gather up all your receipts and financial documents.
Give yourself an hour on a subsequent day to organize
the receipts. And don’t forget to set aside more time
than you think you’ll need to actually do your taxes.
2. Hunting and gathering. If you’re methodical by
nature, this part of tax time will be a breeze -- you’ll
simply head to your files and find everything you need.
For the organizationally challenged, this process may be
painful. You need to find all those tax forms that you
know you saw in your mailbox, but haven’t seen since,
not to mention receipts, W-2s and other important
papers.
3. Get organized. Once you have all the necessary
documents in hand, sort them into appropriate
categories: tax forms, W-2s, medical expenses,
charitable deductions, investments, etc.
4. Take advantage of all legitimate deductions. Mortgage
interest, home equity loan interest, home office
deductions and child tax credits are some obvious
write-offs. If you have questions, it may pay to invest
in professional advice.
5. Pay up. If the bottom line is that you owe the
government taxes, but you don’t have the cash on hand,
don’t panic; you have a few options. Consider paying in
installments, paying by credit card, or even requesting
an extension. To use an installment plan or get an
extension, you still need to file the correct forms by
April 15. Before using your credit card to pay, get a
copy of your credit report from a service such as
experian.com to make sure there won’t be any surprises
affecting your credit.
6. Use your return wisely. If you are getting a refund,
take a minute to decide how to use it. While the
temptation is to consider it “found” money, resist the
urge to spend it on a trip or a new sofa. Instead, why
not invest it or put it in the bank? If you are carrying
credit card debt, apply the amount of your tax return to
paying off what you owe.
7. Plan for next year. If you spent way too much time
getting your information in order to do your taxes, make
it easier on yourself next year by starting a filing
system now. Many people choose one credit card to use
for most of their purchases throughout the year. That
way, by saving your credit card statement every month,
you’ll have a complete record of your expenses.
8. Is it time for a change? If you owed Uncle Sam money
this year, or if you have a huge return coming, you need
to adjust your withholding. While getting a refund may
seem like a good deal, the goal should be to break even.
If you’re getting a refund, you’ve basically been
loaning the government money -- without interest.
Increasing the allowances you claim so less is taken
from each paycheck means more money in your pocket each
month. If you owed this year, decrease your allowances
so more money will be withheld from your paycheck and
you won’t have the same unpleasant surprise next April.
9. Tax time is a good reminder to check your credit
report and make sure you’re on track with your financial
plans. Look for obvious mistakes on your report, such as
credit card accounts that aren’t yours and closed
accounts that have not been used for more than seven
years, but are still showing as open. If you find
inaccuracies on your credit report, you should take
steps to correct that information.
For more information on checking your credit report,
visit www.experian.com.
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More Organization = Less Stress During
Tax Season
Courtesy of ARA Content
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