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Special section 7 Bankrate experts with 7 top tips for '07

Although taxes may not be on your mind, remember Uncle Sam is not far behind. Here are seven tips to help you get off to a good start once the holiday cheer wears off.

 

7 moves for the 2007 tax-filing season

4. Get organized. With all the disasters that have hit in recent years, you not only need to be organized for taxes, you need to be ready for when disaster strikes. It's been my experience that organized clients pay less in taxes because they have a good set of records. Go to an office supply store and buy yourself files for this year and for next. Get your 2005 tax return and organize your files by the major categories on the return. When you get done, you'll have files for wages, interest, capital gains, individual rental properties, charity, mortgage interest, taxes, etc. In January you'll start receiving correspondence labeled "important tax documents." Of course, these are important and I suggest you put them in their corresponding 2006 file. Start out with a fresh set of folders for 2007. And get those important papers to a safe place -- above sea level preferably.

5. Refresh yourself. If you operate a business that is not incorporated, you may want to consider the advantages of incorporating in the New Year. Not only do corporations give you shelter from some financial risks, they also give you flexibility for saving on taxes. But the time to set up the corporation is now to have it in place at the beginning of the year. If you wait until January to set up the new corporation, you won't have a tax identification number or bank account for a few weeks in January, and that starts to cut into your tax savings and complicates your tax filings. Incorporating gives greater advantages than either a partnership or sole proprietorship. Although the country is in debt up to its neck, there's no altruism in overpaying your taxes.

6. Risk analysis. It's always good to move out of the path of a storm, but you should also evaluate your insurance needs. With all that we insure nobody wants to think about more insurance, but it's too late to add insurance when the need arises. Bankrate's Insurance Guide can help you sort through various types of coverages available from health to home. Also especially helpful is Bankrate's guide to homeowners coverages. Those folks covered by Medicare now have some familiarity with Part D -- the prescription drug coverage -- and are in a better position to evaluate its advantages.

7. Don't push the deadline. The closer to April 15 we get, the busier your accountant gets. And just like anybody that has too much work, some of it doesn't get his full attention, especially when he starts working 12 to 14 hour days. Get your data to him as early as possible so your return gets his utmost attention. If you visit your accountant later on and he looks like he's overwhelmed, consider taking an extension of time to file your return so that you both have opportunity to adequately review your taxes. If you don't have an accountant or tax professional, evaluate your situation to determine if you could benefit from professional advice.

To ask a question on Tax Talk, go to the "Ask the Experts" page and select "taxes" as the topic.

Create a news alert for "taxes"
-- Posted: Dec. 18, 2006
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