Tax time always seems to create anxiety-filled situations, and few people actually look forward to it. Fortunately, there are a few simple, time-saving tips and not-so-secret tricks that can help avoid the frustration level often experienced.
Equipment and Materials
Before diving in to expenses and deductions, ensure you have everything you need within reach. Include a decent calculator, lots of pencils and paper, every tax form that you need, including income tax, interest declarations, receipts and the tax instruction booklet for your tax forms.
Have adequate lighting and a comfortable chair and writing surface. Spread out your materials, forms, and receipts on a table and organize them into piles and sections. For example, put all your receipts in one pile, all your state forms in another, and your federal forms in a third.
Be sure to have a few extra tax forms on hand or a computer and printer so you can print more. This way, the first forms you fill out can serve as practice forms or rough drafts. If you make a mistake that can’t be fixed, you can reach for a new form.
Always be prepared to complete a practice or rough draft of your taxes even if you intend to file online. It’s better to be surprised with a deduction found by their program questions than to blindly assume you do or do not qualify per their wording. A little bit of time and preparation could save you money.
Location
Whenever possible, select a quiet and private area in which to prepare your tax returns. Constant traffic through the area or high levels of noise can seem to conspire even the most dedicated tax payer and can increase stress and aggravation.
Allow room to spread out. Separating receipts into like stacks, based on expense, for example, allows comprehensive review of totals and validity. Tax codes of ever-increasing complexity call for increased concentration and attention to detail. Allow yourself more room than what’s offered on a living room coffee table. However, don’t overdo it and have to call a cab to reach the stack of home improvement expenses!
Kitchen or dining room tables are good locations, but allow yourself some quiet time in those areas. Trying to prepare tax forms is somewhat hampered if preparing the meal or if children are crossing through or the dog insists on play time.
Allow enough time in one location to progress from start to finish or set up shop in an area where you can leave your organized piles and forms on the table fora few days. Having to gather up the receipts, the forms and the equipment and restart later can cause oversights, mistakes and lost information, to say nothing of the added aggravation.
By-Deduction Review
Once you have your expenses organized, read the applicable deduction qualifications, restrictions, and exclusions before you review the individual receipts. Even if you believe you know the tax code well, a brief overview never hurts and could well save hundreds of dollars in penalties and fines. If you have any questions about qualifications or codes, call a tax expert and find answers to your questions before you dive in head first with filing your taxes.
Take each deduction area in review independently of others. Compute, recompute, then double-check all figures. When satisfied the numbers are accurate, enter them in the applicable areas on your rough draft forms. Ensure they are listed on the various Schedule of Deduction forms that apply as well as included in the total on the master form.
Completed Rough Draft
Before you review the completed rough draft, take a break. Clear the mind and stretch cramped muscles. When you return, review again. Taking a little bit of time off will give you the opportunity to look at your taxes with fresh eyes and a renewed mind. This way you can catch any mistakes or even find deductions or qualifications you missed the first time around that you may be able to claim.
Also scan the instructions specifically for restrictions and limitations. Ensure what you have listed is not disqualified from tax deductible status. You can always file an amended return to gain deductions you missed, but you could incur penalties, interest, and fines if you claim a deduction or an amount that isn’t qualified.
Final Draft
When you have satisfactorily completed and thoroughly reviewed your rough draft, transcribe the information in indelible ink onto a clean form or start your online submission. Never rely on software to maximize or even accurately portray your tax profile.
Make and keep a copy of any and all final forms you submit and shred your rough drafts. If submitting your taxes online, always print out a copy for your records; do not make someone else’s electronic record your only proof of what you submitted.
State Taxes
Always prepare the federal return first. State tax forms often call for specific information that is found on your federal return, so have that information on hand and ensure that it is accurate before tackling state taxes.
The same outline of effort and organization applies to state taxes: sort, organize, review, verify, and complete a rough draft. Then review the rough draft carefully for mistakes and missed qualifications or deductions. Transfer the confirmed information onto a hard copy even if completing state taxes online and submitting electronically.
Summary
Organization is key to preparing your taxes. The better you organize and the more prepared you are, the easier it becomes to self-file taxes or e-file and verify. Remember: they are your taxes and your deductions not the tax software’s. Educate yourself as best you can on deductions and restrictions for which you do or do not qualify.
About the Author
JC Ryan is a freelance writer for MyCollegesandCareers.com. My Colleges and Careers helps people determine if an online education is right for them and helps them search for online degrees that can help them reach their goals.