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By Sarah Welch and Alicia Rockmore
In six short weeks, whether you like it or not, your tax return is due.
There’s no reason tax time has to be a stressful flurry of last-minute preparations capped off with a sprint to the post office (or accountant). If you take a few little steps each week, you’ll be pleasantly surprised at how much easier it all comes together on April 15th. But, unless you’re a financial-type, you may not be sure how to break down such a daunting task. That is why we’ve put together this tax prep schedule. Although it may seem like a lot of steps, the average “appointment” on the following list should take you no more than sixty minutes to complete – and many may take less than five. Stick to this schedule and you’ll be more likely to make it through this tax season gauntlet mistake-free and with sanity in tact.
March 8: Book Time With Your Accountant and Buy a Tax Organizer.
If you are going to work with an accountant to prepare your taxes, and you haven’t yet met this year, call her today and make an appointment to meet to review your return in about four weeks. Get yourself ready to wrangle all of the necessary tax paperwork by buying an accordion file, like the Tax Filer, or a plain one with at least 10 pockets from an office superstore like Office Depot.
March 9: Locate Last Year’s Return.
The best place to start your tax prep work is with last year’s return. Why? Because it will serve as a cheat sheet for this year’s return. Most likely everything you put into last year’s return you are likely to need again this year. So, make a list of all income sources and every itemized deduction to serve as your master checklist for 2009 returns. It will also tell you if you have a carry-forward or how you treated certain income before. Once you find it, make a copy of it and put it in your accordion file in a pocket marked “2008 Return.”
March 11: Gather Social Security Information.
You will need the social security information for any dependents claimed on your return, and your spouse if you are filing jointly. Gather that information now so that you aren’t running around like a chicken without your head at the last minute. Put that in a pocket named “Dependents.”
March 12: Gather Your W-2s and Work-Related 1099s.
Most employers will have sent employees W-2 forms and independent contractors 1099 forms by the end of January. These documents detail the amount of money you earned during the previous year and the amount of taxes withheld. Review all documents you have received to be sure that they are accurate, total the income earned and taxes withheld on a separate piece of paper and then put that along with the forms in your file under a tab named “Income from Work.” If you are missing one, contact the employer immediately to get your copy.
March 14: Gather Forms for Investment Income and Interest Earned.
Investment firms will send out 1099-B form to you, typically by the end of January, detailing stock and bond trades you made throughout the 2009 tax year. For each security sold, look up its cost basis and note whether you held that stock for more or less than a year. Then calculate your total capital gains tax liability using a calculator like this one we found on Moneychimp.com. Also gather any K-1 forms from partnerships, statements from banks/brokerage firms detailing interest income earned, and records of rental income or other supplemental income. Tally the net supplemental income earned on a separate sheet of paper and put it with the tax documents in a pocket titled “Capital Gains.”
March 15: If You Sold Your House This Year, Gather Proof of Deductible Home Improvement Expenses.
As long as you have proof that you incurred home improvement expenses, you can deduct them from the original basis of your home when determining the taxable capital gain. Check with the IRS or an accountant if you are unsure which expenses are deductible. Put the net income earned from the sale of your home along with all relevant documentation in the folder named “Capital Gains.”
March 16: Gather 1098 Forms for Deductible Mortgage Interest.
Your mortgage company will provide you with a 1098 form detailing the interest you’ve paid
