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How To Organize Your Tax Records

How To Organize Your Tax Records

Learning how to organize your tax records can save you stress and time when it is time to file your taxes.  Start the year with an organization system so you know where all of your records are when it is time to file your taxes.  If you aren’t sure what records you need, here is a general guide that is suitable for most people.

Income

Your employer will issue a W-2 with your income and tax information for the year.  You should also include interest statements from investment accounts and any 1099s that you may receive for work done the previous year.

English: Same as :File:2010 Receipts & Expendi...

English: Same as :File:2010 Receipts & Expenditures.PNG, but slightly improved. Bar chart comparing estimates for United States federal government total receipts and expenditures in fiscal year 2010. (Photo credit: Wikipedia)

Medical Expenses

File receipts for all medical expenses and your out-of-pocket health expenses.

Donations

Keep all receipts for cash donations made from the previous year.  You can also deduct non-cash donations made to a charitable organization.

Real Estate

If you own your home or other real estate, keep all interest statements and tax assessments.

Child Care

If your children are in day care for all or part of the year, keep a copy of your receipts for payment.

Student Loans

The interest you pay monthly on a federal student loans is tax deductible.

Letters from the IRS

If you receive any letters from the IRS, keep these in your file.

Previous Tax Forms

Keep all previous tax forms for future years.

Other Receipts

Keep all receipts that you may need for a deduction.  You may not need them, but it is better to have them in case you do. If you plan on itemizing your deductions, keep all receipts for taxes you paid, medical expenses, interest you paid, charitable donations, loss due to theft, job expenses and other receipts you think may qualify for a deduction.

If you plan to itemize your deductions, it will be a lot easier for you if you keep these receipts organized throughout the year.

If you do not have a lot of paperwork each year, you can store them in one file.  However, if you have a lot of receipts or other tax papers, you should organize them by type to make your free tax filing 2012 easier and quicker.

For most people, a simple paper organizer that holds several files is sufficient to organize tax information.  Use a separate file for each type of paperwork, and file receipts and information as soon as you get them.  Keeping paperwork organized and not letting it pile up is important to stay organized, so file your paperwork as soon as your get it or once a month as needed.

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Money Saving Tips Through Tax Moves

Every year there are changes that are made in most homes. These changes always affect the taxes filed. In order for you to save up on tax, there are a few things to consider.

Check the following money saving tax moves before filing your tax returns

If you changed or set up a business in 2011, then the expenses for all the movements will be tax deductible.

• To be eligible for job search expense, you have to have used more than 2% of your adjustable gross income. Make sure to list your deductions. This means that those expenses greater than the 2% may be claimed back.

• Another tax deductible expenses include that moving expenses. However, this depends on a test of time and distance.

• All unemployment benefits received from 2011 onwards are taxable.

• If you use your home as your central place of business, as a meeting place for customers or you have a separate structure detached from your home, used as an office, then the home office deductions will apply.

If you sent a child to college or had another one join the family.

Or, if you are a parent you may be able to save up a dollar or two when filing your returns.

• If you have a boyfriend, girlfriend or any other individual that qualifies the test of being a relative and a dependent then you will qualify for dependent deductions.

• The government is generous enough to provide for education tax credits and deductions for those individuals who are paying expenses for their education or their spouse’s or dependent’s education.

• Qualified expenses of up to 35 percent of qualifying expenses are deductible under the child and dependent care credit.

• If you decide to adopt, then you will qualify for a Qualified Adoption Tax Credit of up to $13,360.

As long as you own a home, bought it or refinanced it, you may be lucky to receive some form of deductions on your tax to help you reduce the cost of being a property owner.

• The loan origination fees paid to refinance your mortgage taken up when the interest rates were lower then you may qualify for the mortgage refinance deductions.

• The overall Energy tax credit was dropped in 2011 but if you have new insulation, roofs and doors you may be able to save up to $500 on deductions.

• Most first-time Home buyers are lucky. This is because, if they took up credit for that purpose, they tax credit will be paid through their tax returns filed yearly.

From these money making tax moves, which one will you use to reduce you tax liability?

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