Getting Organized at Tax Time

During the last month, you’ve probably received several tax-related documents in the mail. They serve as a reminder that the deadline for submitting your tax return is looming on April 15. Do you have everything you need? Getting your tax return done can be stressful, but the New Jersey Society of Certified Public Accountants (NJSCPA) offers the following advice on what you can do better to ensure that your return is completed on time and accurately, as well as tips on ways to plan ahead so you can take some of the stress out of tax time next year.

Get Organized
By the beginning of February, organizations should have sent you many of the documents you need to complete your return. This will include a W-2 from your employer showing what you’ve earned this year, Forms 1099 reporting any additional earnings and investment income you’ve received, and statements from your mortgage company, bank or other lender with details that you’ll need for your return. You may also receive other paperwork documenting medical bills you’ve paid and charitable donations or financial investments you have made. CPAs recommend that you set aside all of this material as soon as you receive it in a special folder or envelope so that you don’t have to search for it when you’re ready to do your tax return. In addition, find last year’s return so that you have it handy for background information and to see what further documentation you need based on what was used last time.

Make Order out of Chaos
Gathering your documentation is a good first step, but it’s also important to put it in a workable order. Sort the paperwork into different files or folders based on whether it relates to income or deductions. Take statements and papers out of the envelopes in which they were mailed so they are easier to identify and access. Make a list of the documents you have and the amounts involved in each case. That will make it easier for you or your CPA to get a timely start on your tax return.

Prepare Throughout the Year
Not all of the documents you require for your tax return will come in the mail in January and February. For example, you may need credit card or bank statements and records of cancelled checks that you receive during the year that show purchases or transactions you’ve made. You might also use receipts that verify items you’re deducting or donations you’ve made. You should also set aside documents relating to major events during the last year, including the closing documents and mortgage information for a home purchase. That’s why it’s a good idea to create a tax file now for next year, to gather the material you’ll need for next year’s return. As you gather this paperwork, remember to ask your CPA about any tax savvy steps you can take now to reduce next year’s tax burden.

Stay Informed
It’s easier to organize your tax return information if you understand more about how the tax law affects you. The CPA profession’s 360 Degrees of Financial Literacy program provides answers to many taxpayer questions, including details on recent changes in legislation. You can find more information at www.360financialliteracy.org.

Your Local CPA Can Help
Many people turn to CPAs to help them complete their tax returns and perform tax planning for the coming year. Remember to consult your CPA with all your tax or other financial questions. If you don’t have a CPA, you can easily locate one online using the NJSCPA’s free, online Find-A-CPA service. Just go to www.findacpa.org, and in a few clicks you can locate a highly qualified professional who can assist you.




Produced in cooperation with the AICPA
©2010 The American Institute of Certified Public Accountants

February 1, 2010