Filing taxes without preparation is like running a marathon without training. It is a long, hard go. With good preparation, filing next year’s tax return will be more like a walk in the park. Start getting ready now.
- Develop a system: Create a practical filing system for your financial papers. First, make files for the categories required on your tax return. When next year’s deadline comes, everything will be pre-sorted. Group non-tax-related items into categories, and make a file for each category.
- Record income and expenses: Keep a day-by-day record of all money coming in and going out. Close acquaintance with your financial situation leads to easy tax filing and eventually to prosperity. Keep receipts for everything, and make notes of small cash outlays. Update your records at least once a week. Pay bills on time, and send invoices promptly. Acquiring this habit saves money and reduces bookkeeping.
- Use software: With simple bookkeeping software, easily track and calculate financial data. Spreadsheet programs, such as Excel and Numbers, provide tremendous flexibility and portability.
- File the backlog: File any piled-up documents for the 2008 tax year. Get the job done with least effort by following this rule: If you touch a paper, file it. Securely dispose of any unnecessary documents.