Get organized for tax season: six tips
Taxes are inconvenient, unavoidable, time-consuming, and can be frustrating. But let鈥檚 figure out what you need heading into the 2013 tax season鈥�
1. Get your numbers in order
First, get everyone鈥檚 Social Security numbers. You鈥檒l need one for everyone on your tax return:聽yourself, your spouse, and everyone you support聽(dependents), including聽your parents or children.
If your children don鈥檛 already have a Social Security number, get one now. Fill out the聽for a Social Security Card聽from the U.S. Social Security Administration website and locate your child鈥檚 birth certificate. You鈥檒l need to bring the application, birth certificate, and your child to your聽local office. Anyone 12 or older聽applying for an original SSN聽has to be聽interviewed in person.
2. Tally your income
Next, gather any documents that show the income you earned in 2012,聽as well as income earned by your spouse聽if聽filing jointly. If you鈥檝e only had one job, no problem聽鈥� you just need a W2 from your employer. You can see a sample聽.
If you鈥檝e done contract or freelance work, you鈥檒l need a 1099-MISC if you made $600 or more from any company or client, according to the聽IRS. You can see a sample聽.
If you didn鈥檛 work last year but collected unemployment, you鈥檒l need a 1099-G.聽If you received interest on savings accounts, made short or long-term capital gains, collected Social Security, or received a pension, you鈥檒l need proof of that as well, which you鈥檒l get from other 1099 forms.
See a pattern here? Proof of income you earned comes either on a W-2 or 1099.
Pull out last year鈥檚 tax聽return and see what income you reported. If you had income from the same sources this year, make聽sure you have all forms in hand. If you don鈥檛 have all documentation聽by Jan. 31, call employers, clients, or bank reps and ask.
3. Find last year鈥檚 returns
As noted above,聽your 2011 tax return is a great guide聽to prepare for 2012 filing.聽Unless your life has changed radically, you鈥檒l have many of the same sources of income, as well as聽deductions like聽mortgage interest,聽property taxes,聽charitable contributions, etc.聽Checking last year鈥檚 return is a handy reminder of what you鈥檒l need to include this year.
If you can鈥檛 find last year鈥檚 returns, you can order a copy online through the IRS website at聽.
4. Line up deductions
Now figure out what deductions you can claim for the year. There are loads of possibilities, but you鈥檒l need documentation to prove anything you claim. For example:
In "Tax Hacks 2012: 8 Easy-To-Miss Deductions"聽we found some commonly overlooked deductions that can save you big, such as child care expenses. If you paid for someone to watch your child, disabled spouse, or dependent family member while you were working, you might be able to聽deduct part of the聽cost. And then there are medical expenses:聽If yours exceeded 7.5 percent of your adjusted gross income, it will lower your taxable income.
Work from home? There are home office deductions, but they come with sticky聽rules.
Other things are deductible too, like mortgage interest, business travel, and work-related education expenses. Check out the Internal Revenue Service鈥檚聽Itemized Deductions 聽for a list. Take your time and go over it carefully. Remember, every $100聽of deductible expenses can mean up to $35聽in聽refunds.
5. Pile on the contributions
If you were charitable last year, you may have earned yourself a tax discount.聽Charitable donations made to legitimate organizations (no individuals or political campaigns) are deductible.聽Donations can be in the form of cash, property, or stock, but the rules can be complex. Check out the IRS鈥檚 "Eight Tips for Deducting Charitable Contributions"聽for a relatively easy-to-follow set of rules.
6. Plan for your refund
Last but not least, plan for your refund. You鈥檒l get it聽a lot sooner if you sign up for direct deposit. The IRS allows聽splitting your direct deposit into up to three different checking and savings accounts.聽Tax form instructions will tell you how to sign up.
Another way to speed up your refund聽(in about 10 days, according to the聽IRS), is to聽file electronically.
And once you have that refund in hand, do something great with it. Check out this story we did last year, "Tax Hacks 2012: 7 Smart Uses for Your Tax Refund"聽for some inspiration, like building an emergency fund, investing, or starting a business.
Angela Colley is a writer for聽, where this column first appeared.
