Monday, January 21

Avoiding the Rush- Preparing your tax return early

It's time to start thinking about filing your tax return for 2007. Here are a few ideas to help you get started.

Tax paper depository
January is the month that you'll start receiving all kinds of tax forms in the mail. Get a large manila envelope, small file box, shoe box, something to centralize the collection of these documents. You'll save a lot of time finding them when you're ready to start working on your return, and you'll avoid having to amend the return if you forget something. Be on the look out for W2's from your employer(s), 1099's from your banks, brokerages, etc., and 1098's from your mortgage company(ies).

Purchase some tax prep software
If you're a do-it-yourselfer, there are a number of software programs available on the market today. I used H&R Block's Tax Cut last year and found it to be easy to use. I've also used Turbo Tax and found that to be just as capable. What I like about these programs is that they will 'audit' your return before you finish them, pointing out any not so obvious errors or red flags.

Another option is to file using the IRS's 'Free File'. If you AGI in 2007 was $54,000 or less, you can use Free File to prepare and e-file your taxes online. If you earned over the maximum, you can still use the IRS's E-file to prepare and file your return. If you file the "old way", you'll be receiving a packet in the mail from the Feds and your State. Be sure that you have all the forms that you need! You can pick these up at any Post Office, some libraries, or download them from the IRS's forms website.

Make an appointment with yourself
When you have all of your paperwork together and have installed your software, its time to schedule a couple of hours with yourself to prepare your return. I like to be in a quiet place where I won't be interrupted.

Direct deposit your refund
Having your refund electronically deposited into your bank account eliminates checks lost in the mail. Another benefit; you'll get your money much sooner than you would if it were being mailed to you.

Getting your taxes done sooner than later relives the last minute stresses of waiting, and if you're getting a refund you won't have to wait until May, June, or July to decide how to spend it!