With the holidays behind us and the new year just around the corner this a good time to get a head start on tax season. The last thing you want to do is wait until the last minute to gather documents and get key information that will be needed to file on time. Having a strategy that focuses on filing your taxes will lead you on a path of success and will also help you save money or add cash to your wallet in 2010.
Consider theses 10 essentials for preparing your taxes to make your journey successful:
1. Decide how you are going to file your taxes: Make a decision now if you re going to “do it yourself”, use on-line software, or hire someone to do your taxes. Whatever method you decide start preparing now to avoid any unexpected roadblocks.
2. Gather all your key documents: Gather and put all your documents in one place. When you start processing your tax returns you want to make sure that you are organize and all your documents are in order and in one place. You will need a copy of all 2009 income statements and what expenses your incurred to make that income. Also, have your spouse and dependents name and social security numbers available to record. Check all your documents for accuracy, make sure you are using the current documents (look for 2009) and lastly make sure the documents that you are receiving are complete. If you need to make any changes chances are you are in a better position to make corrections if you start in early versus late.
3. Use the right forms and the right filing status: Make sure you know what forms you need and select the right filing status. Using the incorrect forms and the wrong filing status could cost you dollars in deductions and credits.
4. Claim all your exemptions: Exemptions reduce your taxable income in other words you pay tax on less income. Personal exemption in 2009 is $3,650 in this economy you need to get all that you can get. There are other exemptions that might apply to you so make sure you claim what applies to you.
5. Don’t leave money on the table: Make sure you take all credit and deductions that apply to you. It is hard to believe it but each year the IRS collects millions of dollars in over paid taxes thanks to taxpayers who do not claim all of their credits and deductions that are available to them. The credit and deductions range from child and dependent care expenses, student loans, moving expenses, tuition expenses and alimony paid, vehicle to name a few. if you are not sure what credits and deductions you might be available check with a professional or check www.irs.gov website.
6. When in doubt or something is not clear ask a professional: This is not the time to be bashful or shy. If you do not understand something or unsure ask a professional, check your library or check the www.irs.gov website.
7. Take your time and do it right: Take your time when you are filling out the forms and read carefully this not the time to multitask or have loud music blasting. Some of most common mistakes that happen when you are processing your tax returns for example, not signing the form; checking your math or placing numbers on the wrong line could be avoided. If you just took the time to not rush through the process. Also, don’t round your numbers up, the IRS might think you estimating your taxes and flag you for a tax audit.
8. Review all your filing documents: I know this is similar to the point above. However I need to drive home the point that it is important that you review your documents and check that you have signed your documents, your social security numbers are correct and your address and your bank deposit numbers are correct. A missing or transposed number could cost you time and money.
9. File and Pay on Time: There is a penalty if you do not file on time and if you do not include your payment. This is not the time for excuses. If you are not ready to file taxes, then file for an extension. If you realize that you made a mistake you have 3 years to correct it, the IRS has made provisions for you to correct your mistakes. For more information check out www.irs.gov .
10. Keep a copy of your return: Many people make the mistake and send the IRS their only copy. Please make sure you make a copy of your tax return and all key document just in case you need to dispute or prove your filing.
These 10 strategies are a good foundation to get you started on your tax preparation for 2010. These guidelines will not only help you achieve success but will also help you get the most out of your tax experience 2010.