Seven Early Tax-Filing Tips That Will Save You Time and Money
The National Taxpayer Advocate recently announced that Americans spend 6.1 billion hours a year on tax prep. That's almost as many hours that 3 million full-time employees work in a year.
You can easily cut down the number of hours you spend preparing your 2011 taxes by taking a few simple steps now. Trust us, tackling tax season in bite-size chunks will make the whole process less daunting.
Here are seven simple, painless tips to save time, money, a headache and hassle down the road:1. Create a system for organizing tax documents as they arrive.
There is nothing worse than sitting down to finally do your taxes and realizing that you can't find an important document. So tip #1 is to have a record-keeping system in place before the first tax document ever shows up at your house. Your system can be as simple as a large envelope or an accordion file. Just designate a specific spot and make sure that everyone in the house knows about it.
If you want to be even more organized, you can use our checklist of critical tax documents to track documents as they come in so that you know what you have and what you are still missing.
2. Review all your tax documents as they come in.
As tax documents show up, don't just stuff them into that great new tax record keeper. Take a moment to review each document as it arrives so that you can correct any discrepancies well before you start preparing your return. If there is a mistake, getting a corrected W-2 or 1099 form can take time, so don't wait until you are down to the wire on your filing deadline.
3. Make sure that you know all the 2010 tax changes that could impact your taxes.Every year sees some new tax changes, but 2010 was a real doozy. The last-minute compromise between the White House and Republicans to extend the Bush tax cuts included a host of other tax changes. Plus, many 2009 tax credits expired. Be sure that you know the new 2010 tax rules so that you can take advantage of every tax credit and deduction possible.
4. Decide whether you are going to go it alone or hire a pro.Thanks to our ridiculously complicated tax code (more than 18,000 pages!), even the IRS Commissioner hires tax prep help! About 60% of us have to pay a professional to help us prepare our taxes. If you are going to use a professional, make your appointment early.
If you are going to do your taxes yourself, decide whether you are going to use tax software (30% of us do). If so, you can get ahead of the game by purchasing your tax software now.
Tax software can help you find every deduction to which you are entitled and helps you avoid common mistakes that can trip you up, such as simple math mistakes (electronic returns have 13% fewer mistakes).
5. Get your tax forms now.
70% of all returns were e-filed last year, so in a move that will save $10,000,000 a year, Uncle Sam is no longer automatically mailing paper tax forms to individual taxpayers.
If you are still filing by mail, get the tax forms you will need now. You can find commonly-used tax forms at your local library or post office. You can also download all tax forms through the IRS's web site, www.irs.gov. You can even still have a copy mailed to you by calling the IRS at 1-800-829-3676.
6. Start gathering your tax information now.
There's no reason to wait until the heat of the battle to start organizing the tax information that you already have. Even before you receive a single tax document here's how you can get a head start:
- Make a list of all your 2010 tax payments and tax refunds
- Gather all those receipts that have piled up throughout the year
- Comb through your credit card bills and checkbook to look for possible deductions
- Tally up charitable donations
There's no sense in putting off the inevitable. Use these tips to get a big of a head start on the tax season now and save yourself headache and heartache as the tax deadline looms.
As you dive into your 2010 taxes, make sure you don't overlook these important 2010 tax changes and be sure to make your tax deductions air-tight.
More from Dolans.com:
Critical 2010 Tax Changes You Need to Know
Tax Document Checklist
How to Make Your Tax Deductions Airtight