Tax Time!

 

We need to gather all our information. The advantage that we have now is much of that information is available digitally—you can find it online. Your W-2s should have already arrived. The 1099s (if you have investment accounts), those won’t show up until mid-February. If you had a retirement account, remember that you don’t have to pay any taxes on the dividends or the capital gains in a retirement account. But, if you did take distributions from the retirement account, you’ll get something called a 1099R. So you need to gather all of that paperwork—and again, much of it is available online which makes it very easy—but you need to go back and look at your tax returns from last year. What’s the same? What has changed? Do you have different income sources? With those W-2s…do you have more than one job? Make sure you get all of them together.

 

And then watch out for those other deductions if you do file that report. You may track them in a notebook. Keep your receipts. (You can pop them in a shoebox.) Now with smartphones, a great thing to do is just snap pictures on your phone of those receipts (remember to back up your phone so these aren’t lost!) or take a note as you go along to track all of those things to make it easier. That’s the real secret with your taxes. If you keep up with the paperwork all along, it’s very simple.

 

You don’t need to keep all of your receipts for every item you purchase during the year. If you have a business or a business on the side, you need to track all of the receipts related to that business. Also, if you make donations, you need to have verification of all those donations. 

 

If you need to, get help. Go to your local libraries. The IRS actually has some free services depending on your income www.irs.gov/free. When all else fails contact a CPA or tax preparer and get them to help you. You want to make sure you take advantage of every deduction that’s available. Yes, we want to pay our taxes, but we want to pay as little as we possibly can.

 

And one other word. If you’re lucky enough to get a refund, don’t spend it all in one place. Save part of it, and then have fun with part of it.

 

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