How to Prepare Your Taxes
- 1). Organize your papers and files long before tax time--your system is key to managing your finances. No matter how simple or sophisticated, develop a strategy that you'll actually use. Stay low-tech by just sorting receipts, pay stubs, W-2s and other information into file folders. Or step up to a comprehensive but easy-to-use software program, such as Quicken (Quicken.com) or TurboTax (turbotax.com). See 184 Conquer Your Paper Piles, 185 Create a Flawless Filing System and 229 Simplify Bill Paying.
- 2). Get a jump on your taxes. If you put it off until April 14, you're more likely to make a mistake, and any tax preparer you work with may not have time to complete your return. Remember, if you file for an extension, you still need to pay up by the April deadline to avoid being assessed penalties and interest.
- 3). Call in the pros. If you feel overwhelmed just organizing your pay stubs and W-9s, or if your tax situation is complicated (1031 exchange, complex investments, buying or selling a business), hire a professional to do the job right. There are different levels of training required for different designations of tax preparers:
- 4). Take advantage of free tax assistance. Download the IRS's Publication 17: Your Federal Income Tax from irs.gov. Known as "the Bible," Pub 17 is a reliable resource for common (and not-so-common) tax payment questions. The IRS has a toll-free TeleTax service at (800) 829-4477, with recorded messages on about 150 tax topics. Have more questions? Call the IRS's 24-hour help line at (800) 829-1040.
- 5). Glean more tips from the IRS Web site. Download forms, instructions and publications, and find tax law information and answers to frequently asked tax questions. Click on "Site Map," then "1040 Central" to better navigate the mammoth site.
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