Now is the Time to Get Organized for Taxes
Organizing tax records now can save time and money. Here are helpful hints from IRS and CFP.
Annapolis, MD (PRWEB) February 17, 2005 -- How is it possibly time to start thinking about taxes again? Well, by now you should have received your W-2s and 1099s in the mail. The only thing standing in the way of your refund (or at least peace of mind) is that mound of paper youve been meaning to sort through all year. How are you supposed to itemize your deductions when you cant find your medical receipts from the time you sprained your ankle ice skating last February or the Salvation Army donation records from last years spring cleaning? And where are those cancelled checks from the renovation in July? The truth is, it doesnt have to be this bad and we know it.
The trick is to start right now by getting those papers organized well before the April deadline.
Of course, the IRS suggests you keep track of your records and receipts all year long. But at least if you do it now, you wont be sorting in a state of panic, and being organized may actually save you money.
According to the IRS, If you do not have records, you may have to spend time getting statements and receipts from various sources. If you cannot produce the correct document, you may have to pay additional tax and be subject to penalties."
The most important thing you can do is make sure you dont throw away tax-related income and deduction receipts. Remember, the IRS still requires you to keep documentation and receipts to support your tax return. This is important to note if you use your computer to pay bills. Tax advisors recommend saving records at least 7 years. The IRS has 3 years to raise routine questions about your tax return; 7 years if it thinks you substantially underreported income. In cases of fraud, there is no limitation. There are other records and receipts that you may need to save indefinitely, such as investments, capital gains and losses, retirement investments and estate transactions records.
What most people need is a well-thought-out, logical method of home filing that doesnt require much time to maintain and that permits them to locate items immediately," says Mary Martin, a personal financial advisor from Ellicott City, Maryland. Whether you prepare your own tax return or rely on a professional, you are the one who must unearth all the income records and find the receipts that will document your deductions."
To make the process easier, Martin has created the Financial Planning Organizer Kit, which breaks down over 200 financially related papers into 22 categories using preprinted file divider cards. Each card describes which papers to store in each category, which papers not to store there and how long to keep those papers.
For additional information, visit the Homefile website, http://www.homefile.net or call 800-695-3453.
The Financial Planning Organizer Kit ($24.95, 48 page handbook + 24 file divider cards, ISBN: 1-882584-55-4) is one of several home filing solutions published by Homefile Publishing. Homefiles kits are written by husband and wife CFPs Mike and Mary Martin, and have been recommended by the Wall Street Journal, the Washington Post, Money magazine and MSN Money.
The Financial Planning Organizer Kit is available from Homefile Publishing at http://www.homefile.net or by calling 1-800-695-FILE (3453). It is also available at The Container Store.
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