Filing your tax return is one of those things that many people wish they could avoid, yet at the same time every year, tax day continues to roll around. Knowing this in advance gives you the opportunity to prepare your documents throughout the year to ensure you are not rushing around at the last minute trying to gather important information. By organizing your documentation throughout the year, you can avoid missing information that could save you money when it comes time to file your tax return. Don’t wait until a few weeks or worse days before your tax return is due, get on the ball now to ensure 2010 tax returns are easier to file in a timely manner. Here are two tips to help you along the way.
Tip 1- Know which records to keep.
Before you can streamline your record keeping, you must first know what documents you will need when you file your 2010 tax return. With so many changes to tax laws, this can become a confusing yet not impossible task. The following documents should be kept for use when you file your next tax return.
- Proof of income – The IRS wants to know exactly how much money you make each year, therefore it stands to reason that you want to keep records on all earnings. This includes payroll records, 1099s, investment records, spousal support and any other taxable income.
- Deductions - There are certain expenses that can help you lower your tax liability which reduces the amount of taxes you are responsible for paying. These deductions are important in that they either lower what you will owe the IRS if you have a tax bill or increase the amount of money you will receive back in the form of a tax return. Common deductions include but are not limited to charitable donations, interest paid on your mortgage, tuition expenses, business expenses (for the self-employed), child care expenses and spousal or child support payments. Keep any receipts that may be used to support a tax deduction.
Tip 2- Keep important documents organized
While it is important to keep all of these documents, it is also recommended you do so in an orderly fashion. Whether you intend on filing your tax return on your own or if you hire a tax professional, having your records organized will expedite the process and save time for everyone involved. Keeping and organizing physical records is necessary in the event you find yourself facing an audit after filing your tax return. You may also decide to keep electronic records by using spreadsheets or software that helps you organize your records. Here is how you can get started.
- Establish one place where you will keep all of your physical documentation. This can be accomplished with a very basic filing system. Label your main folder Tax Documents 2010.
- Make a checklist that includes all of the documents that you will need when you file your tax return, this way you will know which documents you need to keep.
- Create a separate file for each of the following: income and earnings, interest statements or other documentation from your bank or financial institution, personal expenses or deductions, business expenses and deductions, and any receipts or documentation that may be used to support tax credits.
These are the very basic files you would need to organize your taxes. The more complicated your situation in regards to taxes, the more files you may have to add to track and organize necessary documentation.
When the time comes to file your income tax return you will have all of the necessary documentation to either complete your return on your own or hand it over to a tax professional. Once your tax return is filed, take all the information you have saved throughout the year and place it inside one large envelope to be saved for future reference. Organizing your tax records as you go is the easiest way to avoid losing documentation that could cost you money in the long run.
This article is provided by Back Taxes Help LLC, a company designed to help you with various IRS tax problems. For self-help tax information or tax professional help, please visit BackTaxesHelp.com
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