It's tax time again. Oftentimes, the amount you owe is enough to raise your blood pressure. Now, add to that the fact that you waited until April 14 to start working on those taxes, and you have the makings of a major meltdown!
This year, don't let tax time take a toll on you. Instead, use these timely tax filing tips to take control.
Tip No. 1: Get organized.
Start a folder of tax information. As you receive your W-2 forms, interest and dividend statements, mortgage interest statements and so forth, file them in this folder. Next, set one day aside to gather other pertinent tax information that will be used in figuring your taxes. Again, place that information in the folder. Gathering this information now will save you or your tax preparer a lot of time and frustration later on.
Tip No. 2: Start early.
Whether you're figuring your taxes yourself or having them done by a professional, don't wait until the last minute to get started. If you're doing your own taxes, this will allow plenty of time for deep-breathing exercises and relaxation techniques. If a professional is figuring your taxes, it will allow you enough time to locate that interest-income form you forgot to file in your tax folder.
Tip No. 3: Choose your weapon.
Should you figure your own taxes, purchase a computer tax program, or pay a professional to do the work for you? The answer depends on your situation and personal preferences. Here's a quick look at the advantages of each:
Preparing Your Own Return
Lots of Americans calculate their own taxes each year armed with nothing more than a pile of tax forms, plenty of pencils, a calculator and lots of patience. If your financial situation hasn't changed much over the years and you don't mind giving up your free time, this may be an ideal method for you. After all, you can't beat the price.
Before you figure this year's taxes, though, make sure you read up on the multitude of tax law changes going into effect this year. These changes affect everything from tax brackets and estate-tax rates to how much you can contribute to your IRA. If you have Internet access, learn more by visiting the Internal Revenue Service's Web site at www.irs.gov. Otherwise, visit your local library for more details.
Using a Computer Tax Program
If you enjoy working on the computer and would welcome help in completing your tax forms, you may want to consider purchasing tax software. Many good programs cost less than $50. Computer programs walk you step by step through the process of figuring your taxes. They also do all the necessary calculations, suggest deductions you may have overlooked, and even provide help if you get stumped.
If you don't want to pay for tax software, you may be able to download a program off the Internet for free. Before doing so, make sure you have virus software to protect your computer. Also, some sites allow you to complete tax forms online without downloading. Be aware that the information you enter in these forms is not private.
One last note about preparing your taxes on your computer. If you give away or sell your computer, make sure you delete all personal information, including all tax information, as a safeguard.
Using a Tax Professional
The advantages of using a tax professional are obvious: You get the services of a professional who eats, sleeps and breathes IRS regulations and tax law changes. This may be especially beneficial this year in spite of the multitude of tax law changes going into effect. In addition, a good tax professional will try to provide every possible tax advantage allowed by law.
Unfortunately, professional tax preparation doesn't come cheap. It may cost several hundred dollars to have your taxes calculated by a professional, but if you have a complex tax situation or are uncomfortable calculating your taxes, that price may be a bargain.
April 15 may seem far away, but it will be here before you know it, so get started today. Getting organized and starting early may not lower your tax bill, but it sure will make this tax season less taxing for you.
