Tuesday, January 21, 2014

Organization is Crucial to Filing Your Taxes

Every year Americans have to file their taxes.  Many dread filing their taxes because it can be a tedious and time-consuming process.  There are tons of tools available to help prepare your taxes and determine if you will get a refund or owe money.  You can file your taxes on your own and hire a CPA to file your taxes.

One of the reasons many Americans end up owing taxes or miss out on claiming deduction is because their they are not organized.  Many taxpayers throw away, misplace, destroy or damage receipts or even falsify documents because the original documents cannot be found. 

Don't wait until the last minute, this year start early and gather all of your receipts and financial paperwork.  You can use an automated tool to track your spending and deductions; use a piece of paper, or word processing software such as Excel or Access.  Getting organized will help you to see right away what deductions you are eligible to receive.  Organizing your paperwork makes it easier to file your taxes because all your informations easily accessible.

Using a tax preparation tool has all the tax laws imbedded in the tool which makes it easier for you to see what deductions and credits you are eligible to claim.  Here are 8 smart ways to help you organize before filing your taxes.

  1. Duplicate. You can ask for duplicate receipts or financial statements if you have misplaced your copy.
  2. Gather. Gather all receipts, monthly, quarterly and yearly statements, medical bills, student loans, credit card statements, prescriptions, financial statements, etc. and place in one easy to find location.
  3. Categorize. Categorize all receipts such as medical, loans, financial statements, purchases, business expenses, debt, charitable donations, income, etc.
  4. Deductions. Identify all items that can be used as itemized deductions and put them in one folder. Determine if the standard deduction for your tax bracket is greater than your itemized deductions. If not, calculate your itemized deductions.
  5. Automation. Use a tax software package like Quicken, Turbo Tax or Tax Cuts.
  6. Go Green. To save money file your taxes electronically. You will receive your refund in approximately two weeks from the date of filing and this will you help save the environment. 
  7. Free Filing. If you salary is less than $58,000 or less you can file your taxes electronically for free.
  8. Companies. If you use a chain tax preparation company you can bring all of your receipts and they will enter the data for you to prepare your taxes.


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