It’s that time of the year you dread. Lucky it only comes once a year! Doing your taxes can be overwhelming, but it is a necessary evil. Even if you are going to owe money and can’t pay, make sure you file your taxes on time without an extension. Most taxes that are filed on time without an extension and are over 3 years old are dischargeable in your bankruptcy, failing to file on time no could affect you in the future.
Here are five tips for organizing your self for tax season:
- Know what can be deducted. For Example: Deduct cash, property and stock donations made to a charity. Make sure you have receipts. You can deduct mileage and vehicle expenses for a charitable purpose. You can deduct your medical expenses including mileage for doctors. You can deduct business expenses.
- Get proper documentation. Doctors, pharmacies, child care providers will all provide you a print out of what you spent with them the prior year if you ask. For any single contribution to a charity over $250, you must have a written acknowledgment from the charitable organization. For property valued at more than $5,000, you must have a qualified appraisal.
- Keep limitations in mind. Your cash gifts are generally deductible up to 50 percent of your adjusted gross income. Noncash gifts, such as property or stock owned for more than one year, are generally deductible up to 30 percent. You can carry over any remaining deduction for up to five consecutive years.
- Transfer records to personal budgeting software such as QuickBooks or Quicken. Enter the information from tax-related transactions electronically to stay organized. Doing so will also help you forecast your tax situation to help you gauge whether to give more to maximize tax benefits.
- Involve the professionals. Hiring a CPA or accountant or tax attorney who is up to date on the tax laws to do your taxes is well worth the cost. Just remember you have to provide them the detailed information so they can get you your maximum deductions.
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