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Getting organized for the tax year
Even
if your tax situation isn't complicated, there's still documentation the Internal
Revenue Service demands. But tax filing doesn't have to be an ordeal. And it can
be less frustrating and less time-consuming if you have all the material at your
fingertips.
By being prepared, you'll be ready to file
your return at the earliest possible moment (the IRS usually starts accepting
returns around mid-January). And the earlier you file, the sooner you'll get your
refund.
Much of the paperwork you'll need
to complete your Form
1040 will tell the IRS how much money you
made so the agency can tax it. But there is
also information that will help you trim your
tax bill.
To help
you organize your tax paperwork, here are some of the most common documents you'll
need.
Filing by the (identification)
numbers
The IRS tracks every taxpayer through a Social
Security number. For those of you who file your
own returns, this isn't a problem. If you drop
all your data off at your accountant's office,
make sure your Social Security number is in
there, as well as your spouse's if you file
jointly.
Do
you have any dependents -- children, parents -- that you'll be claiming? Then
you'll need those numbers, too. This includes everyone, even infants. If your
kids don't have their numbers yet, contact the Social Security Administration
immediately. A missing Social Security number for any person listed on your return
could cost you.
The IRS could delay the processing
of your return, slow down any refund or disallow
a credit if you don't have the identification
numbers to support it.
And don't forget the tax identification
number of the person or business that takes
care of the children while you're at work. You'll
need it if you file for the child care credit.
You should receive a statement from the care
provider that includes the tax ID number, as
well as the amount you paid, so you can claim
the credit.
It
is called an income tax
Since it's our income that the tax man wants
a piece of, start thinking about the employment
and income data you'll need to file.
By the end of January, every employee
should get a Form W-2 from his boss showing
how much was earned, how much was taxable and
just what taxes were withheld. If you have more
than one job, you should get a Form W-2 from
each employer.
You say you're still waiting for your W-2? The IRS
has a substitute form, Form
4852, you can use in its place. You'll need last year's final pay stub for
data to enter on the alternate W-2. And even if you have your official tax form,
check it against that last pay stub to make sure the W-2 data is correct.
If you're an independent contractor, the company you
worked for should send you a Form 1099-MISC
showing your gross earnings. You can view, but
not download, Form 1099-MISC on
the IRS Web site.
If you're self-employed, you have
a bit more work to get organized. Track down
all receipts and documentation for business-related
expenses, from the mileage records you kept
when using your car for business to the office
equipment and supplies you bought to the utility
bills you paid to keep the home office lights
on.
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