Few people look forward to preparing their taxes every year. Getting your tax documents organized beforehand can be a hassle in itself.
Carol McCabe is the owner of company called Simplify, the art of living organized. She says with the following six simple steps, you will be well on your way to a hassle-free April 15.
1) Begin early. Begin working on your taxes about a month before you file. This gives you ample time to find receipts, gather documents and do a thorough job. If you hire a tax pro, schedule a meeting early, before the rush, to determine your needs.
2) Use last year's tax return as this year's blueprint. If your tax situation has remained stable over the last year, your 2009 return can guide you for 2010. Use it to make a list of what you will need-brokerage statements and W-2s for example-and check off each item as you receive it.
3) Create a simple filing system. For most people, a 3-file system for income, expenses and deductions suffice for tax organization. You will save so much time if you do not have to look all over to find your documents. Reuse the files for 2011 and spend five minutes a week to file pertinent items as they arrive.
4) Keep electronic files. Cut down on paperwork by archiving electronic copies of important documents on a CD-ROM. Download-and back up- on your computer your bank statements and credit card statements that have tax implications. Those are good enough for the IRS.
5) Consider major changes. Big changes-a job search, a new baby or a home purchase-can mean big deductions and tax credits. There are a lot of expenses we incur that we do not always take into consideration.
6) Evaluate and adapt. After you have submitted your return, think about the biggest hassles, whether it was collecting receipts or remembering to list charitable deductions. Set up a system-it could be as simple as a shoebox or as sophisticated as computer software-to ensure that you are prepared for next year's tax return.