Proactive and Tax Savvy for the New Year
- By:
- Catherine Brock | January 03, 2008
Start organizing your tax documents now, and have one less thing to worry about when spring fever sets in.
HGTV's Mission: Organization takes seemingly hopeless packrats and transforms them into neat, organized homeowners. With the tax year approaching its end, why not take a page from HGTV's book and launch your own organization mission? As a grand prize, you'll get to avoid the post office when April 15 rolls around.
Getting your tax paperwork in order ahead of time has its advantages. If you expect to receive a refund, you'll get it sooner by filing early. If you expect to owe taxes, you're better off knowing the damage ahead of time. You can prepare the return, save up your pennies for a few months, and then mail in your check in April.
Start by collecting the necessary Social Security numbers (SSNs). This will be no problem if you have no dependents and you file an individual return. If you file jointly and you have lots of dependents, however, gathering up the SSNs could be more challenging. Make sure that any new additions to the family-natural or adopted-have SSNs. If you have an adoption in process, obtain an adoption taxpayer ID number for the child and use that in lieu of an SSN until the adoption is finalized.
You'll also need tax identification numbers of your childcare provider, and the charitable organizations that you support. On those subjects, you should locate all receipts documenting both your childcare expenses and your donations.
Your income documentation might come in several forms, depending on what you do for a living. If you follow the traditional employment path, you should receive a Form W-2 from your employer by early-February. Since employers can occasionally fail to send out W-2s, the IRS provides Form 4852 as an alternative. You'll have to fill out Form 4852 using the information contained on the last paystub that you received for the tax year.
If you work as an independent contractor, you'll receive 1099s from the companies that paid you during the tax year. Make sure to organize your expense receipts as well, since you can deduct ordinary and necessary business expenses.
You should also be on the lookout for 1099-INTs and 1099-DIVs from your bank and broker. These forms document your interest income and dividends/distributions, respectively.
If you carry a home mortgage loan, you'll receive a 1098 Mortgage Interest Statement from your lender. Take care of this one, because your mortgage interest is likely to be one of the largest deductions on your return.
Completing your tax organization mission early will take some of the stress out of preparing your return. Uncle Sam may not know the difference, but you're likely to feel a great weight lifted if you can send off that return long before the last minute.
HGTV's Mission: Organization takes seemingly hopeless packrats and transforms them into neat, organized homeowners. With the tax year approaching its end, why not take a page from HGTV's book and launch your own organization mission? As a grand prize, you'll get to avoid the post office when April 15 rolls around.
Getting your tax paperwork in order ahead of time has its advantages. If you expect to receive a refund, you'll get it sooner by filing early. If you expect to owe taxes, you're better off knowing the damage ahead of time. You can prepare the return, save up your pennies for a few months, and then mail in your check in April.
Your personal barcodes-Social Security numbers
Start by collecting the necessary Social Security numbers (SSNs). This will be no problem if you have no dependents and you file an individual return. If you file jointly and you have lots of dependents, however, gathering up the SSNs could be more challenging. Make sure that any new additions to the family-natural or adopted-have SSNs. If you have an adoption in process, obtain an adoption taxpayer ID number for the child and use that in lieu of an SSN until the adoption is finalized.
You'll also need tax identification numbers of your childcare provider, and the charitable organizations that you support. On those subjects, you should locate all receipts documenting both your childcare expenses and your donations.
If you made money, you pay taxes
Your income documentation might come in several forms, depending on what you do for a living. If you follow the traditional employment path, you should receive a Form W-2 from your employer by early-February. Since employers can occasionally fail to send out W-2s, the IRS provides Form 4852 as an alternative. You'll have to fill out Form 4852 using the information contained on the last paystub that you received for the tax year.
If you work as an independent contractor, you'll receive 1099s from the companies that paid you during the tax year. Make sure to organize your expense receipts as well, since you can deduct ordinary and necessary business expenses.
You should also be on the lookout for 1099-INTs and 1099-DIVs from your bank and broker. These forms document your interest income and dividends/distributions, respectively.
Mortgage interest windfall
If you carry a home mortgage loan, you'll receive a 1098 Mortgage Interest Statement from your lender. Take care of this one, because your mortgage interest is likely to be one of the largest deductions on your return.
Completing your tax organization mission early will take some of the stress out of preparing your return. Uncle Sam may not know the difference, but you're likely to feel a great weight lifted if you can send off that return long before the last minute.
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