5 Tips to Help Arrange Your Documents for Tax Season

Every year Americans have to file their taxes unless they don't earn enough income to qualify having taxes taken out.  There are tons of tools available to help prepare your taxes and determine if you will get a refund or owe money.  Some of the most widely used tools are Turbo Tax, Tax Cut and Quicken.   

One of the reasons many Americans end up owing taxes or miss out on claiming deduction is because their financial papers are not in order.  Many throw away, misplace receipts or even falsify documents because the original document cannot be found. 

Don't wait until the last minute, this year start early and gather all of your financial paperwork.  You can use an automated tool to track your spending and deductions or use a piece of paper, or word processing software such as Excel or Access.  Getting organized will help you to see right away what deduction you can qualify for. 

Using a tax preparation tool has all the tax laws imbedded in the tool which makes it easier for you to see what deductions you are eligible to claim.  Here are 5 tips to help arrange your documents for tax season.

1. 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.

2. Automation. Use a software package like Quicken or Quick Books to record all of your deductions. Use basic column headings: Item, Date Purchased or Sold, Cost, Quantity, Total Cost.

3. Categorize. 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. (This can be found in the IRS tax manual by using the items identified in tip 2). If not (standard deduction is less than itemized deduction), use the worksheet included with your IRS tax booklet to calculate your itemized deductions.

4. Go Green. To save money file your taxes electronically. You will receive your refund in approximately two weeks from the date of filing and you help save the environment. 

5. Be Patient. Don't get a tax refund loan (rapid refund) or refund anticipation loan. You are charged a fee to get the refund loan which usually has high interest rates and associated fees. Save yourself time and money. 

How to File Your Taxes for Free

Filing taxes can be a burden for most people. If you don’t have accurate records it can be a nightmare. The best way to file your taxes is to stay organized. File all receipts, paperwork or possible paperwork related to personal and business expenses and tax deduction in one folder.

The main expenses to keep track of are: all business income and spending, home office expenses, retirement contributions, student loan interest, energy efficient upgrades, real estate purchases or sales, charitable donations, contributions to college savings plan, and capital gains.

Some taxpayers are eligible to file their taxes for free. Here are 4 ways to file your taxes for free.

1. Free Software. If your adjusted gross income is $57,000 or less you can use free tax software such as: Turbo Tax, Free TaxAct, Tax Slayer or H&R Block’s Free File.

2. Use Free Forms. Anyone can use free file fillable forms from freefilefillableforms.com. The site provides online versions of paper federal tax forms.

3. File Electronically. Efile (electronically) your tax return for free by using direct deposit or pay your taxes online for free.

4. Paper forms. Use paper tax forms to file your taxes and mail them to the IRS. The only cost is postage.

You can get your taxes prepared for free using the IRS Volunteer Income Tax Assistance (VITA) program or the Tax Counseling for the Elderly (TCE) programs that. VITA prepares taxes for people who make $50,000 or less. Call 1-800-906-9887 to get more information.

TCE offers tax help for people 60 years old or older at 1-888-227-7669. You can also visit an IRS volunteer at a self-assistance service site to get free tax preparation. Visit the IRS website to find a facilitated self-assistance site.

It's Not to Late to File Your Taxes

This time of year accountants get very happy because they are busy with many customers. Everyone is not so happy unless you are getting a refund. A lot of the laws from last year have changed so please be sure to read the instructions when filing your 2009 taxes. Here are 6 tips to help you file your taxes. Thanks.

1. Gather all receipts, monthly/quarterly statements, medical bills, student loans, credit card debt, etc.

2. Be cautious when purchasing a tax preparation software. Research the credibility of the company and verify if the software provides automatic updates to tax laws contained in the software. Go to Better Business Bureau website to check out a company's history. Click on the Business Link under the Check It Out section. 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 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 tax form instruction manual as items that can be itemized). If your standard deduction is greater than use the standard deduction, if not, use the worksheet included with your taxes 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 or refund anticipation loan. This is a waste of time and of money. You usually have to pay a fee to get the refund loan which usually have high interest rates and associated fees. See the article discussing this issue.

6. If you are owed taxes this year and are unable to pay your taxes by April 15, 2010, file an extension no later than April 15, 2010 or setup a payment plan. If is never wise to owe taxes because the interest and penalties fees that accrue each day will put you further into debt.