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Bankrate's 7-day tax-filing plan
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.
| Here's
how to get your
taxes done in one
week by spending
just about an hour
a day.
|
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|
 |
| Day 1 |
Gather
data |
| Day 2 |
Reduce
taxable income |
| Day 3 |
Find
your forms |
| Day 4 |
Fill
out your forms |
| Day 5 |
Take
a break |
| Day 6 |
Check
your work |
| Day 7 |
Sign,
seal and deliver |
|
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Day
1: Gather data
Gather 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 income
Welcome 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.
| -- Updated: April 7, 2009 |
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