Famed cowboy humorist Will Rogers once remarked that, "Income taxes have made
liars out of more Americans than golf.
" Whether taxpayers have used "creative
accounting" to intentionally avoid some tax liabilities, or whether the IRS
forms and instructions are so massively complex and that even honest people will
sometimes make mistakes, is difficult to judge.
You can, however, avoid unnecessary and sometimes costly mistakes, and pay
only that amount for which you are legally responsible by obtaining reliable tax
information.
By being aware of the tax rules and regulations, the ever-changing tax laws,
and by keeping abreast of the new tax preparation software that is currently
available, you can save more of your hard-earned dollars. Always remember, "it
is not how much money you make that is important. It is how much you are able to
keep."
The first step in preparing your tax return is to gather all of your records
that pertain to income and expenses from last year. In other words, get
organized. Long gone are the days when taxpayers could simply store a few
cancelled checks in shoe boxes to be hauled to some tax preparation service on
April 12th.
Don't wait until the last minute to begin organizing your records, and try to
stay organized throughout the entire tax year, not just April.
Documents you need to collect include W2's (salary and wages), 1099's (social
security benefits, pensions, interest, dividends and other miscellaneous
income), alimony payments received, and any other pertinent income statements.
Also gather and organize any and all records that support deductible
items--health care payments (including health insurance premiums), charitable
contributions (both cash and non-cash), work-related expenses, educational
expenses, moving expenses, labor union dues, and investment and tax preparation
charges from last year. Scrounge for over-looked deductions like the rent on
your safety deposit box or the cost of postage to mail in last year's return.
The more you deduct, the less tax you will have to pay!
Secondly, determine which forms and schedules you will need. In most cases
the IRS simply mails you the same form you completed last year--whether that be
1040EZ, 1040A, or the standard 1040. Before filling out your form, carefully
read all the instructions provided to determine if you need, or would benefit
from filing a different this year.
Your tax situation could be vastly different
from last year, and using a different form could well save you a great deal of
money. Obtain any additional tax forms, schedules or publications to assist in
the preparation. These can be found in most large post office or online from the IRS.gov.
Next, begin to fill in your return. Follow the enclosed IRS instructions,
refer to specific IRS publications, or simply follow the directions included
with your tax preparation software. Total all your income, then subtract your
deductions, exemptions and credits. Simple!
Fourth, check your return very carefully for mathematical errors.
Particularly verify that you used the correct tax table when determining the
amount of taxes owed. Names should be written exactly as they appear on your
social security card.
Confirm that your social security number (and that of your spouse), if filing
a joint return are correct. Make sure to include all dependents, their dates of
birth an their social security numbers as well.
Now sign and date your return. If you a filing a joint return, your spouse
must also sign it.
Finally, attach all required forms and schedules paying special attention to
your W2's and 1099's. After your tax return has been completed, but you still
feel somewhat anxious, have a competent, honest and reliable tax preparation
expert review your handiwork.
It will cost only a fraction of the amount
of having them prepare the entire return and they may spot some glaring errors
or some missed deductions.
A little organization and planning can prevent April from being your most
"taxing" season. Best wishes for large refunds!
