Planning for tax returns
It's time to start thinking about getting your taxes done. But there is no need to panic or even worry. With some easy to take steps in the planning process you can get your taxes done and over with. Here some tips on planning for tax returns:
- Get serious and get started now! Start by scheduling a time to get to work and commit yourself to that time. Use your scheduled time to do your taxes and only your taxes. Assemble all the materials your will need in one place so there is not a lot of time spent looking for forms, office supplies or those pesky receipts.
- Get organized. Now is the time to put those organizational skills to work. Get all of your W-2s together to report wages, your 1099s to report interest and dividends, your 1099Bs for reporting stock and bond sales, and your 1098s for deducting your interest and taxes. Both the Internal Revenue Service and your accountant both want final numbers. You will need to have those numbers ready as they will not be interested in getting them for you.
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- Get informed. Do you know about all the changes the U.S. tax code has seen this decade? If you do not now is time to get educated. You can't expect to play the tax game successfully, unless you know the rules. If your return is "tax simple," the IRS can actually do the return for you, or you can have your return done online, sometimes even for free. If you consider yourself tax-savvy, do your own return only after learning all the new rules. A good place to learn from is the IRS' absolutely free Publication 17 It's 298 pages of everything you will need to know about your 2007 tax return and your planning for 2008.
- Get help if you need to. If you are in need of a tax professional than do not hesitate to contact one. A trip to a tax professional will at least tell you what you are missing. And don't worry about asking for help; it's deductible! But don't put off calling for an appointment since the later your accountant does your return, the more tired that tax preparer will be. You will want your return done when he or she is at their best.
- Get your tax filing status. You must decide how you're going to file. The lowest rates will be with joint returns, but if there are potential high medical or miscellaneous deductions, married filing separate may yield a lower total tax. You may want to do it both ways. There are many variations on tax status filing so explore what will work best for you.
- Get your taxes adjusted. There are certain deductions that are allowed regardless of whether you itemize or not. Some of these deductions include IRA and qualified pension contributions, student loan interest, moving expenses, alimony, medical savings account deductions and, for the self employed, the health insurance deduction and deduction for half the self employment taxes paid. These are known as the "above the line" deductions. Again, your tax professional can help you determine which ones apply to you.
- Get your cash. You need to decide how you're going to file. How you file is going to affect how quickly you're going to get that refund. If you do use e-file, and make the IRS happy, you are going to get your money back faster. Alternatively, if you decide to paper file, direct depositing your refund eliminates mail delay and speeds your access to cash. It also eliminates the possibility of checks lost in the mail.
- Get your taxes filed. None of the above matters if you don't actually get your return to the IRS. Even if you owe money, there's interest and penalty for not filing, in addition to interest and penalty for not paying so it is to your benefit to file for an extension if you need.
