The end of 2011 is near, which means that tax season is just around the corner. Are you prepared? A few of you may answer yes; the majority of you are not. This article is going to help you learn how to get your documents ready for tax preparation
. We’ll start with the documents that you need, organization tips, and why you shouldn’t file until you have everything in hand! Let’s get started, shall we?
What Documents Are Needed to Get Started?
You will need W-2’s and 1099’s – both of which come from your employer. Businesses, by law, are supposed to mail out your tax forms by January 31. 1099’s will be sent out for any work you performed throughout the year via a W-9, such as freelance or contract work, in addition to bond or stock sales as well as interest from savings accounts. You may also receive a 1098 if you paid on mortgage interest throughout the tax year. The same is true for student loan interest that is paid.
Review these documents upon receipt in the mail to ensure they are indeed correct with your own records. If a discrepancy is found, contact the HR or payroll department of your corporation and have a corrected form re-issued as soon as possible.
If you plan on filing itemized deductions rather than claiming the standard deduction, make certain that you have receipts for everything you are claiming including but not limited to gas receipts, utility and house maintenance bills if you work out of your home, purchase of equipment to perform your worry, etc.
How Can I Organize All This?
It’s a lot of documents, and a lot to take it; however, it is more than possible to organize it all. You need to put everything into their own pile. For example, you don’t want to put your W-2 forms with the form showing the interest you paid on your mortgage throughout the tax year. These are two separate piles.
Let’s start off with this: when the forms start coming to your home in the mail, start organizing. Get several folders and mark each one for a different tax-related document. For example, you’ll need a folder for the following: income/revenue, deductions, expenses, credit write-offs, interests on loans and mortgages and charitable donations. Make a folder for each and as the W-2’s come in, place them in the income folder and as the 1098’s come in, place them in the interest folder.
Why You Need to Wait for Everything Before Filing Your Tax Return
None of this is very hard, even though it may be a bit time-consuming, especially if you have to hunt through your house for the proper documents. However, there’s no reason waiting until the very last minute to do this. When it actually does come crunch time, your life as well as your accountant’s or tax filer’s life will be much easier.