CityView Magazine

Get your documents in order now and April 15 won’t be (quite so) painful | By Kelly Twedell TAX PREP 101 P retty soon your important tax documents will begin arriving in your mailbox. Hopefully you’ve learned your lesson from years past, when you frantically searched high and low for those precious scraps of paper and related documents. Uncle Sam is ready, and you should be, too. If you have not implemented a file folder or large manila envelope to stash away receipts and other important documents throughout the year, here are some tips for getting it altogether in time for this year’s tax return – and to make next year run smoother. Start now and dedicate a place for these W-2’s, 1099’s, investment statements and year-end contribution statements. A folder or envelope is usually sufficient. If you haven’t received a W-2 by January 30th, call your employer. Whether you will be sitting at your computer with a calculator and some strong coffee or you are handing over a thick envelope to your tax preparer, get some sort of order to your documents. The days of bringing in a shoebox full of miscellaneous receipts are over. Separate your papers and receipts into categories: real estate, investments, income, business expenses, charity, childcare, medical and miscellaneous. Local firm Utley & Knowles suggests adding up and totalling the expenditures on a separate piece of paper and attaching the total to the corresponding stack of documents. This, they say, will save your tax preparer time, which will save you accounting fees. If you feel that your tax situation is more complex than the average person’s, perhaps you should start with a checklist to make sure that you don’t forget any documents or miss any deductions. Most tax software programs will have an extensive list you can use. You can also ask your tax preparer in advance for a preprinted organizer. Utley & Knowles has adopted this practice and mails such a list out early to their clients. They say that everyone benefits from the checklist as it allows clients to see their previous year’s tax information and helps them to not forget any miscellaneous items. For example: If you have young children who attend daycare, be sure to get the statement with the organization’s tax identification number and something in writing showing the dollar amount you paid for care over the year. Likewise, if you pay a babysitter or nanny, be sure to keep those records of payments or create some type of invoice to hand over to your accountant. The process of preparing your taxes does not have to be painful. After all, April 15 is tax day, year after year. You know it’s coming. So make 2011 the year to start some good habits that will save you valuable time in the end.CV Even if you did not have a baby or buy a house in 2010 to qualify for large tax credit deductions, you still have until December 31 to mail a check to your favorite charity and itemize the donation as a deduction. Whether your donation is to your alumni association, your church or a non-profit organization, it pays to give. When it comes to the IRS there are specific guidelines that need to be followed to save you a headache should you be audited. At any rate, these guidlines should be used as best practices to avoid fines or penalties. 58 | Winter • 2010/2011

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