NEW YORK (MONEY Magazine) -
Tortured by your taxes? You're not making matters any easier for yourself -- or your accountant -- if you have to scramble to find and assemble receipts and other tax records come filing time.
Solution: File tax records all year
Granted, organizing your tax paperwork might not feel as satisfying as, say, rearranging photographs from a trip to France. But it's likely to bring you far greater peace of mind -- and perhaps even prove lucrative.
"I've had clients find thousands of dollars in overlooked deductions," says professional organizer Robin Blank, who runs Chaos Consulting in Boston.
For tax paperwork, Blank suggests setting up an accordion file that follows the 1040. Using that system, here's a rundown of what you need to save throughout the year:
- Income: In addition to the W-2s and 1099s you get in January, you'll need records of any other sources of income, including gambling winnings (yes, that's income too).
- Business expenses: If you have a home office or you moonlight, keep the receipts for unreimbursed expenses -- client entertainment, work travel and office equipment.
- Medical expenses: The threshold for deducting health-care costs is high (they must exceed 7.5 percent of your gross income). Still, save receipts for co-payments, deductibles and out-of-pocket costs.
- Charitable donations: Don't forget records of old clothes, furniture and other stuff you give away.
- Taxes: Hold on to property tax and quarterly tax payment stubs (or the canceled checks), plus any records of state and local taxes.
- Investments: Save confirmation statements every time you buy or sell an investment or make an IRA contribution.
- Education: You may be able to write off some college tuition or fees for continuing education, so save receipts.
- Miscellaneous: Job hunting expenses may be deductible if they exceed 2 percent of your adjusted gross income.
Investment: 10 minutes a week.
The payoff: Your accountant's goodwill -- and perhaps a bigger refund.
Problem 5: Can't find your vital documents?
|
