Monday, December 14, 2009

2009 Tax Organizing Tips

There are great tax estimator tools to help you estimate if you will get a refund or owe money on your taxes. Some great tools are on the IRS, H&R Block, Turbo Tax and Quicken websites. The IRS website also has several tools such as the withholding calculator to determine if you are taking too much or too little out of your paycheck.

If you owe money on your taxes you can make payment arrangements via email, by phone or online at the website. One of the reasons many Americans end up owing taxes is because they are not organized – they throw away or misplace receipts and miss out on eligible deductions and tax credits. This year start preparing early to file your taxes, don't wait until the last minute. Here are 7 tips to help you get organized to file your taxes.

1. Gather all receipts, monthly and quarterly statements, medical bills, student loans, credit card statements, etc. and store in one easy to find location.

2. Use a software package like Quicken or Quick Books to record all of your deductions. If you don't have this software then you can use an Excel spreadsheet with these basic column headings: Item, Date Purchased or Sold, Cost, Quantity, Total Cost. If you don't have the Excel software program just use a plain old pencil and paper.

3. Identify all items that can be used as itemized deductions and put them in one pile. Determine if the standard deduction for your tax bracket is greater than your itemized deductions. (The list of items you gathered in step 2 and verified against the IRS tax form instruction manual as items that can be itemized). Check to see if the standard deduction is greater than using the itemized deduction, if not (standard deduction is less than itemized deduction), use the worksheet included with your tax booklet to calculate your itemized deductions.

4. To save money file your taxes electronically. You will receive your refund in approximately two weeks from the date of filing.

5. Don't get a tax refund loan (rapid refund) or refund anticipation loan. This is a waste of time and money. You have to pay a fee to get the refund loan which usually has high interest rates and associated fees.

6. If you salary is less than $52,000 or less you can file your taxes electronically for free.

7. Be cautious when purchasing a tax preparation software. Research the credibility of the company and verify if the software provides automatic updates to the IRS tax laws contained in the software. Go to the Better Business Bureau website to check out the company's history and see if anyone has filed a compliant against the company.

1 comment:

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