The One Week Tax Preparation Guide

June 27, 2011 by  Filed under: Taxes 

Tax preparations can be a very chaotic and hectic process and for this very reason, many taxpayers dread the tax season. Collecting all of the necessary paper work to ensuring you do not make errors on the forms can be such a hassle. However, with proper planning, the preparation for your taxes does not need to be a terrible experience. Here is a simple one-week guide to preparing your taxes:

Monday – Gather All Tax Documentation

The best way of having an easier time with your tax returns is to continually file all your tax records as you receive or generate them. However, if you are busy, you can have a box or folder where you deposit all the receipts and documentation (you can sort them out during the tax period). On the first day of your tax preparation, you will need to sort these records in terms of qualifying expenses, credits, deductions, and incomes. Ensure that you have included all the W-2 records for wages, all the 1099 forms received throughout the year from investment companies, stockbrokers, clients, banks, and various other sources, bank statements, sales documentation for assets, distributions records, gambling records, qualifying expense receipts, withheld tax records, unemployment benefits, and any other tax-related records.

Tuesday – List Your Qualifying Exceptions, Credits, and Deductions

Once you have gathered and sorted out the records on the first day, you can then proceed on the second day to listing and confirming the various tax entry categories.

  • Exemptions – Exemptions will typically include you, your spouse, and your dependents but it may also be extended to a parent that you are caring for. In 2010/2011, you get a deduction of $3,650.00 your Gross Taxable Income (above the line deductions) on each of your exemptions. You need to indicate the Social Security numbers of each of these individuals that you are claiming exemptions for the claim to qualify. Next, you can list any other above the line adjustments including moving expenses, student loan interests, alimony payments, and IRA contributions.
  • Deductions – You need to determine whether you want to use standard deductions or itemized deductions. Standard deductions are preferred because they are straightforward and you will not need to bother with calculating individual deductions. However, if you have charitable donations and/or qualifying medical expenses among other write-offs, you may want to itemize, as it will enable you maximize on the deductions and get more tax relief.
  • Credits – Tax credits are the best tax relief because they reduce your tax liability directly. For taxpayers who earned low to medium incomes, they could qualify for the Earned Income Tax Credit (EITC). Other credits that you could be qualified for are the $1,000.00 Child Tax Credit or the Adoption Credit, if you have any adopted children. There are more credits that you may qualify for and you can learn more about and confirm the credit guidelines on the IRS website.

Wednesday – Get the Relevant Tax Forms

You then need to get the 1040 tax return form. This form comes in three variations; 1040EZ, 1040A and 1040. There are other tax forms that you may need to attach to your 1040 form, depending on the various credits and deductions that you are claiming. Some credits such as the adoption credit will also require you to attach support documentation to the 1040 Form.

Thursday – Fill Out Your Form

If you are using a tax software program, the software will guide you step-by-step in filling in the various sections of the tax forms. For those who choose to file manually, the process is also simple, as you have listed all the information to fill in the form. For those filing manually, you may get extra help from the “Instruction Book” for your tax returns. This will help you take full advantage of all tax breaks that you could qualify for.

Friday – Cross-check the Entries Made

The fourth day may have been hectic as you ensured that you filled all sections of the tax forms accurately. Therefore, it is always advisable to counter check your entries on the next day for errors that may have been made carelessly or in the bustle of things. Therefore, on the fifth day, ensure that you go through the entries again to ensure that the correct amounts were indicated. If you are filing manually, you will also need to confirm the additions of different sections of the form (make sure to get your math right). Once you have confirmed the entries, the form is ready for filing. If you are doing this electronically, you can go ahead and sign it electronically and submit the form. For those filing manually, you have one more day of posting the returns to the IRS.

Saturday – Signed, Sealed, and Delivered

The sixth day is for those filing manually. You will sign and seal the forms for mailing. It is advisable to make a copy of the forms (and supporting documents) before posting them for future reference. Ensure the correct address is indicated before you mail out your tax returns.

Sunday – Reflection

After diligently and hopefully, successfully working on your taxes for six days and filing your taxes in time, a rest on the seventh day is worthwhile. You can also take this time to reflect on the taxes that you have filed, specifically noting how you can improve on your methods for future tax preparation and tax planning.

Rob L Daniel and partners of Limon Whitaker & Morgan, for years have helped businesses and individuals Nationwide, with their delinquent IRS & State tax problems. The firm is based in Los Angeles, California USA. / Tel:888.321.6188

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