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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.
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