Excerpted from the new book, “How to Do Space Age Work with a Stone Age Brain” TM
Every year American companies lose millions of dollars in productivity to employees who end up taking their own personal time off to do their taxes. Whether you are filing by paper from just one W-2 or running multiple enterprises, streamlining now will pay off this year and in future.
Applying these proven Tax Time Tune-Up tips will save you time, frustration and could even save you money. Even if you only reduce your stress level – it’s worth it! Start today by getting an archive box or file crate to hold all your tax related files and forms.
If you have a good filing system, but you keep getting bogged down in old records: Every January, pull last year’s financial files, any business related expenses, proof of income and all tax related items. While you are taking old files out, make the replacement new file folders for all of your regular home and business or personal financial and legal documents.
If you have no functioning filing system for your home (or business) I recommend you sort out your papers for tax and archives after setting up the FileSolutions TM color-coded pre-printed file kit that fits your current filing needs at http://www.organizer-extraordinaire.com
That way you’ll have the right place to put each item as you handle it. I use the Home and Small Business FileSolutions TM kits in my own business, which makes it easy for me to guarantee your satisfaction.
Tax Preparation Software: By using tax preparation software, you can finish your federal and state returns in about 90 minutes—if you’ve completed the steps above. The software helps you find deductions, does the math for you and tells you what you owe or what your refund will be.
Use tax preparation software matched to your situation and financial software; there are several available (TaxCut, TurboTax, etc.).
I use TurboTax (by the makers of Quicken) to do my own taxes. If I can do it – so can you! Then, I have a tax professional check my return for way less money than it would have cost me to have my business and personal taxes done by a tax professional.
Good News/Bad News: If your Adjusted Gross Income for 2005 is less than $28,000, or you qualify for Earned Income Tax Credit – go to http://www.taxfreedom.com and use Intuit’s TurboTax program online for FREE!
Online tax-preparation sites keep improving their do-it-yourself tax tools, ease of preparation and regular or e-filing expertise. These offer the same process as desktop software does but, it is all done online. After the products fo through your return for errors (and suggest possible tax-savings), you can print your completed return or file it electronically.
The IRS likes electronically filed returns so much, in fact, that it's set up specific developers that provide free prep and filing to certain demographic groups. Go to www.irs.gov to see if you qualify.
Some tax-preparation web sites are cheaper than their desktop counterparts. But they don't always have the most complete version of tax help that the desktop software does.
There can also be additional costs of state filing services, sometimes at more expense than the federal counterparts. A recent PC Magazine rated the top three Tax Web Sites as: TurboTax (ààààà), TaxCut and Complete Tax (both àààà).
Make a file tray marked Tax Stuff every January. While sorting your mail put all 1099's, W-2's, and any tax-related material into it. You can also put colored accordion file pocket folders in your ‘tax box’ for incoming tax documentation.
Use your credit cards to simplify your accounting. Select which cards you will use for business, travel or expensed transactions, household, personal, and use only one card for all your internet transactions. Label your cards until the usage becomes second nature to you.
Credit card buyer-protection programs are useful in a merchandise or service dispute. Keeping only one credit card number exposed to the web limits your exposure to fraud. I use three cards only: business, personal, and web.
At month end use your credit card statements, auto/transaction log and checkbook to track expenses for your ledger or computer program instead of chasing all the receipts.
Keep a compartment, or envelope in your briefcase where you can easily stuff any receipts or notes. Then, use it. Have a drop box in your office for the expensable receipts from your briefcase or pockets. At home make a place to put any receipts that refer to warranties or personal property records.
After April 15th, archive all tax-related files: separate the previous year from your active files into an available (but not daily use) archive box. Put in a back-up disk or CD of your accounting program for that year along with the data. Also, put your calendar and a carbon copy phone message book in the tax archive box – it’s all proof of business use.
Place prior records into garage or closet storage. Mark each box on the outside by tax year and put all related tax backup documentation into it. Include a copy of the tax return itself, as well as any 1099s, W-2s etc.
Keep a transaction log for auto mileage and miscellaneous transactions. You must have a log to deduct auto expenses, and when you maintain a transaction log the IRS does not require that you keep receipts for expenses under $75.00. This documentation goes into your ‘tax box’ which becomes your ‘tax archive box’.
You can set up your Personal Digital Assistant (e.g., PalmPilot) to use an Expenses Notes section to easily maintain your daily business expenses.
Save yourself money and stress by using these tips to get a jumpstart on 2004 taxes. Tune-up your own file system, or if you don’t have one, use the cost-effective FileSolutions(R) file kits. Or you can go all the way with new electronic preparation and filing to make sure this year is better than last April 15!