Taxes are like those holiday fruitcakes. They always seem to show up and just sit there. No one wants anything to do with them, except maybe to push them to the back of the buffet table. And the longer they sit, the harder they get.
Well, Bankrate can't make taxes (or fruitcakes) any more palatable. But we can help you move that unappetizing tax task off your desk. All it takes is breaking the chore down into digestible components.
Completing your tax return is a big job, but you don't have to tackle it all at once. By spreading out the task, you can save your sanity and maybe a little tax money, too, since you'll be better able to look for ways to cut your final bill.
Get taxes done in a week
Here's how to get your taxes done in one week by spending just about an hour a day.
7-day tax-filing plan
- Gather data
- Reduce taxable income
- Find your forms
- Fill out your forms
- Take a break
- Check your work
- Sign, seal and deliver
Day 1: Gather dataGather all your income data. It is, after all, called an income tax.
Find all your W-2 wage statements; any 1099-MISC forms, if you did independent contract work; and all the statements detailing just how much your savings and investments earned. If you sold a stock or other property, you'll need those data, too.
Did you win the lottery? You probably didn't win the big jackpot or you would've hired someone else to worry about this now! But any amounts you win are taxable.
And if you're enjoying your retirement, you may owe a part of those monthly pension checks to Uncle Sam.
Even if last year was a tough one financially, you may have some tax consequences. If you were out of work for a while and collected unemployment, those payments are taxable, and you should have received a Form 1099-G showing the amount.
Find all these income statements, clip them together and you're done for the day. See you tomorrow!
Day 2: Reduce taxable incomeWelcome back. Day two probably will be the fullest of our tax-filing plan, but it's worth it. Today we start slashing your tax bill.
Pull together all your exemption, deduction and tax credit info. These items will help you whittle down your income to the actual amount that the Internal Revenue Service will tax.
You get to take $3,500 off the top for each person you claim as an exemption on your return. That's generally a pretty easy determination: you, your spouse and any dependents, which generally means your kids. But did you care for a parent, even one who didn't live in your home? You may be able to claim an exemption for that person, too.
Next, there are some expenses that any taxpayer can take without bothering with extra paperwork. These include certain IRA contributions, student loan interest, alimony payments or moving costs. Collect the backup for these nonitemizing expenses first.
Now check the standard deduction allowed for your filing status. Most taxpayers use this rather than bothering with tracking every expense to itemize. If the standard amount works for you, great! You may be through today in less than an hour.
But if you find itemizing will help cut your taxes, you have a bit more work to do.