Thursday, January 12, 2012

Early Tax Preparation

Paper clutter, when it comes to tax forms can cost you money. If you overlook deductions, contributions, or other chances to itemize, you can lose out. Already you are receiving W-2s, 1099s and year end statements. Designate a folder for all of this incoming tax paperwork - I like to make mine red and it sits in the back of my files.
Whenever anything comes in that might relate to taxes I just drop it in that folder. At this point in time I don't bother categorizing what goes in there - I just make certain that it gets there.
All year round I place contributions and tax related papers in this folder. It might be the tax on my car tag or the house - in it goes.
I use a computerized bookkeeping system for my work, but it is also important that I have paper backup of what I have itemized there. If I bought a new computer and I entered it into my system, the IRS will not take my word for that. I'll need my receipt or the deduction will not be allowed.
I keep my business receipts in envelopes - one for each month of the year. This is my back-up if I am ever audited. Some people scan receipts into their computers for safe keeping and that is an acceptable method. Just back up your computer files in case it crashes (remember my computer deduction?).
Get on top of everything coming in now and as soon as you file for this end of year, set up that red tax file to start collecting all of your donations and tax related papers for the upcoming year. It will make the final crunch time so much less stressful.

Jonda S. Beattie
Professional Organizer

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