Two Things Certain in Life…

100 Dollar Bill

in the world nothing can be said to be certain except death and TAXES.” -Ben Franklin

Why wait until the last minute to do your taxes? Get a head start this year by organizing your documents and receipts early. The best software systems in the world (Quickbooks, Quicken, etc.)  are not useful if your financial paperwork is not in order. Develop a DAILY, WEEKLY, MONTHLY, or QUARTERLY routine that includes managing your finances.  If you do not have the time to spare or are uncomfortable with number crunching, consider outsourcing these tasks.

To help make this tax season and future tax seasons a little easier make the following folders/categories and use them to file documents throughout the year:

Income documents:
– W-2s and 1099s
– Social Security statements (1099-SSA)
– Dividend statements (1099-DIV) and interest statements (1099-INT)
– Investment income
– Other sources

Expenses and Deductions:
– Health care expenses
– Real estate property taxes and paid mortgage interest
– Charitable donations
– Business expenses

Investments:
– Deductible or tax-deferred investments (Roth accounts)
– Nondeductible investments (IRAs)
– Taxable investments (stocks)

Now instead of going with paper documents, you may want to consider going the electronic route.  Try creating these three  files/categories on your computer.  Many of these documents are online now.  For deductions you can use ItsDeductable.  If these documents are not online, simply scan them or outsource the scanning for someone else to do (Pixily, Shoeboxed).

Once you are done reporting these documents, keep them with your tax return and reuse the folders/categories for next year’s taxes.  As always be sure to consult with your accountant for more information.

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{ 1 comment… add one }
  • Janet Barclay March 3, 2010, 4:41 am

    Great checklist!

    It is so worth it to outsource your bookkeeping and/or taxes. I used to do my own until I got audited one year and found I’d made a big mistake on my return. There was no penalty, but who needs the stress?

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