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It's Tax Time Again!
From the editors at WIFE |
Whether you prepare your own tax return
or employ a tax preparer, you will need to compile an accurate listing of your income and
deductions. Although compiling tax information can be an unpleasant and time-consuming
task, it is not really difficult.
- If you receive wages or
retirement benefits, you will receive a Form W-2 or W-2P by January 31 that shows your
income and withholdings.
- If you are paid on commission with no withholdings, your income will be reported to you
on a Form 1099. You will also receive a 1099 form for other payments, such as interest,
dividends and the proceeds from the sale of real estate or securities.
- Remember that you must declare all taxable income that you have received during the year
from whatever source, even if you did not receive a reporting form from the payer.
- If you received a check in December but did not deposit it until after January 1, it is
still taxable income to you for the year in which you received it, not the year you
deposited it into your bank account.
- Review the deductions you claimed on last year's tax return, then sort through your
monthly bank statements and remove from each statement the canceled checks representing
tax-deductible items.
- Be sure to review your January bank statement to remove checks written in the prior year
that had not cleared by the beginning of the new year, since they are deductible for the
year written.
- Sort the deductible checks into groups, such as donations, taxes, medical and dental,
interest, and miscellaneous deductions.
- Locate the receipts for bills that you paid with cash, and place them together with the
canceled checks.
- Also list amounts that you paid by credit card. Total the checks and receipts for each
category, and transfer these totals to a summary of your tax-deductible items.
- After summarizing your tax data, insert the checks and receipts into envelopes and file
by category.
- Place all the envelopes in a large manila envelope labeled "1999 Tax
Information." The checks and receipts will then be readily available in proper order
in the event of a future tax audit.
- Most tax preparers base their fees on the amount of time that is required to prepare
your tax return.
- By summarizing your tax information, you will greatly reduce the time required to
prepare your tax return, and the savings in preparation fees will be well worth the
additional time that it took to prepare your tax summary.
The Women's Institute for Financial
Education (WIFE) is a non-profit organization which provides financial education,
networking opportunities, seminars, and workshops for women of all ages. |
