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January 2011

Prepare early: A few ways to make this tax season stress-free

Your family has left, the presents have been opened (and maybe returned) and all the holiday meals have been classified as “leftovers” in your refrigerator: the holiday season is officially over.

This tax season doesn't have to be a stressful one.

You now get to look forward to a wonderful New Year, and start thinking about tax season?

For many people, the thought of preparing their taxes creates a mixture of anxiety and stress. It’s a time to put away the holiday cheer and pull out the antacid.

But this tax season doesn’t have to be a stressful one. By starting your process early, and following a few, simple tips from 21st Century Insurance, you’ll be well on your way to a painless process.

1. Start early. Don’t put off the inevitable. April 15th will come quickly, so the sooner you start, the sooner you will be done.

2. Take stock of your tax documents. Make an inventory of all your needed tax documents, like W2 and 1099 forms, as well as receipts, copies of bills, checkbooks, proof of donations, etc. Be careful to review any tax-related documents you receive in the mail for accuracy.

3. Organize. Create a system to organize all your tax documents in one place. Maybe use something as simple as a box or manila folder – it doesn’t have to be sophisticated. The idea is that you have a central place to store material as you gather it.

4. Research. Make sure you are aware of any changes for 2010 that may impact your taxes. With energy rebates, the homebuyer’s credit and other incentives, you’ll want to make sure you can take advantage of every credit or deduction possible.

5. Decide who’s preparing your taxes. Depending on a lot of factors, you may decide to prepare your own taxes or hire a professional. Either way, be sure to make your decision early. If you decide to prepare your own taxes – and – use tax software, you can get ahead of the game and purchase it now. If you opt to hire a tax preparation professional, make your appointment as early as possible.

6. Get your forms now! If you end up preparing your taxes and decide to file them by mail (and not electronically), get the tax forms you need as soon as possible. The most common place to find tax forms is at your local library. However, you can download all the forms you need by visiting irs.gov/formspubs, or have copies mailed to your home by calling the Internal Revenue Service (IRS) at (800) 829-3676.

7. Relax. Remember that this too shall pass. If you end up having questions about tax preparation, you can contact the IRS online at irs.gov, or call them at one of the local toll-free number listed on their site.

There are probably many other things you would rather do than prepare your taxes. But remember, the more preparation you do ahead of time, the better experience it will be.

Sources: Internal Revenue Service; ehow.com; aol.com; yahoo.com

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