Our favorite season is upon us: tax season. The W2’s and other miscellaneous tax documents have been mailed and received, now begins the daunting task of preparation and filings. If you are like millions of other Americans, the most uncelebrated day of the year is most likely April 15th. However, we can show you how tackling tax season does not have to be a headache.
What I have done with my tax returns in years past is create a consolidated folder. I have a physical folder on my desk that contains all of my documents that I will need to file my taxes. Ranging from W2 forms to 1099-DIV to student loan interest statements, I compile all these documents into a folder so aptly named TAXES. Then I travel to all the various websites that house the other documents that I need to file my taxes: bank statements, investment statements, Walgreen’s prescription statements, you name it I go hunt and print the document.
Bank statements these days are great depending on who you bank with. I bank with Wells Fargo and they have a spending report that allows me to export every red cent I spent from the year prior into a handy excel spreadsheet the breaks out all of my spending into medical, household, restaurant, the whole nine yards. I am able to use this when I itemize in such an easier fashion.
But if you are also like me and keep every receipt, this is great if you spent cash on some of your itemized deductions. I am a stickler for receipts. Considering I had been audited once in the past I have been sure to keep every single receipt from the dawn of time. Not really, but keeping your documents for at least seven years is the way to go if you claim them on your taxes. Tax filings are much the same as well, I finally just shredded my tax filings from 1997…I swear I am not a hoarder. However a good idea to keep your tax documents in case of an audit or you need to file an amendment to a prior year tax return.
When you actually go to file your taxes some things to keep in mind, especially if you have special circumstances like a blogger, gambler, contest winner and or are self employed. Many of your expenses are tax deductible. We will take a gambler for instance, many gambling winnings are claimed, but I have yet to see the losses claimed. You got it, when you win, you sometimes lose as well. We always claim the income, but are unaware that we can claim the expenses that are attributed to earning (or winning) the income.
Don’t be afraid to ask questions. Most folks file the minimum and do not ask for other ways to save on their taxes and or ask what is tax deductible.
I did a YouTube video some years ago that even covered this topic coupled with the first time home buyers tax credit. This year many of us will be feeling the pain of the Obama Care (Affordable HealthCare Act) tax penalty and or filing. In years past we have claimed everything for our healthcare from the cost of the premium to the prescriptions to the mileage on our vehicles to drive to the physician. Check on the IRS website, TurboTax and or your local tax advisor for more information, but don’t be afraid to ask questions.
Finally, do not stress. Taxes are a way of life. Tax filings are inevitable, just take a deep breath and dive in. Yes they are a pain in the neck. Yes, they can be confusing, but they don’t have to be. In general they are only confusing because we are trying to work at them while our emotions and stresses are heightened. Set aside some quiet time to work on these where you are not rushed and you can apply some thought and patience. Tackling tax season shouldn’t feel like you are wrestling a bear. Take it in stride and know there are plenty of resources available to you to answer any questions you may have.