Preparing for 2013 Taxes

As the end of 2012 quickly approaches, it’s time to begin planning and preparing for income tax filings.   Whether you use an accountant or tax service or file on your own there are several tips that can help you prepare now or all year long to make the tax filing process much easier.  Here’s what you should have ready at tax time:

• Personal information including social security numbers, birth dates, and identification
• Last year’s tax filing information to refer to.
• All of the W-2s that come from employers.
• Financial transaction information from throughout the year.  This information can be compiled at the end of the year but is much easier if done periodically year round.  Here are a few suggestions for tracking important transactions:
  • Filing:  Having a filing system for important documents, receipts, bank statements, and other documentation is important.  Your filing system can be either paper file folders or online images.  Find a system that works for you and be consistent with putting papers in their place regularly.
  • Software: There are many programs you can install or access online to help you keep track of your financial information.  These programs allow you to track daily transactions as well as compile year end reports as well.  By allowing you to create categories, store important memo details, and track individual transactions not only will it be easier to find the necessary information for tax filing you’ll be able to use the information for financial planning and budgeting as well.   Using a financial software program year-round allows you to quickly see at a glance where your financial strengths and weaknesses are.
  • Online services:  From online tracking software to online bill payment services and online statements offered by your bank you’ll quickly be able to access important tax related information. 

Determining just how you want to tracking and categorize your financial information will help you prepare for tax season.  Whether you have chosen an online or installed software program or simply have a paper check register, just the act of balancing your checkbook every month will help you be more on top of transactions.  Using tracking accounts, color coordinated entries, or a more complex system of filing you’ll have the information you need.  In addition having last year’s tax return as well as important identification information will help make the process much quicker and easier.

The most important thing to do when preparing all of the needed information for tax filing is to compile it in one place and have it as organized as possible.  The more organized you are throughout the year the easier everything will be at year end.  When everything is ready you’ll simply need to make your appointment or begin your filing process.  With everything there together you’ll find it easy to find the receipts, numbers, and statements you need to fill in every line item.