Organizing for Tax Season

Tax season is upon us, and for those of us in the financial field, it's a busy time of gathering paperwork, finalizing some numbers and awaiting the distribution of certain forms necessary to complete certain returns. 

There is no easy way to complete the workload so below are a few pointers to help the average individual to complete their taxes.  For military personnel, it is wise to complete your tax return earlier than April 15th just because of international mail.  Filing your return online is becoming the recommended way to expedite your tax return being processed.

• Gather all financial statements for tax year 2011 including bank statements, brokerage statements, 401k, IRA, Mortgage, business expenses & receipts, and all other relevant financial data. 
• J.K. Lasser's How to Prepare Your Tax Return is a great reference source if you plan to DO IT YOURSELF.  Tax laws change, and what was true one year changes the next.  Having this wonderful resource is a wise investment.  Also, it is wise to invest time into reading it (as much as folks dislike reading up on the topic) because you may determine a claim on your taxes that you had not learned about previously.
• HRBlock offers tax classes and some are free or at a reduced rate for military and their spouses.  If you would rather get more comfortable in a group or class setting, this may be a great option.
• Tools for tax preparation include a table, chair, lamp, calculator, pencil with an eraser, your files (preferably in a accordian or box or whatever filing system you utilize), your computer, a drink of water and a clock.  It is wise to setup a card table or a room solely dedicated to tax preparation work....that way if life happens and you have to walk away, you can return and start right back up with work rather than waste time setting it all back up again.   (I don't think that people realize what timewasters they allow in their life so I will comment on this next).
• TIMEWASTERS - yes, folks are all guilty of wasting their time especially when it comes to tax preparation work.  The phone rang.  The children needed me.  The dog had to be walked.  I have to be at church 3 to 7 hours a week.  The weather impacted me.  I was tired.  I don't want to do this.  No wonder no one likes to do this job because they allow everything else to get in the way of the priority.  Focus on achieving this goal and a sense of relief will fulfill you more so.....if it's any consoldation, being a good steward of your finances and home life is an investment of time that I am quite certain any true Christian church will appreciate and reinterate.
• Step one is gathering all paperwork and sorting it all.
• Step two is sorting the financial information into the various categories.
• Step three is completing the application...this can be done online and saved.
• Step four is to review and double-check your calculations as well as your 2011 tax year information.
• Step five is to send it certified mail to the IRS and/or e-file it making double sure that you get a printed confirmation.
• For those who must use an accountant or CPA, it is recommended that you copy certain documents that you must retain for your records.  Some CPAs lose material and you will not get it back.
• Even if you have a CPA complete your tax return, you must review it, sign it and deal with it. 
• Paying the CPA their fee is a wise investment so a timely payment is recommended.
• When corresponding with a CPA, it is wise to be ready with your questions, do not take up much of their time and realize that they are pulling LONG hours up until April 15th.  Emailing is easier on everyone, and you may get a reply back at 4 a.m.
• Once your return is completed and sent, it is wise to file the returns in a fire-proof filing cabinet as well as retain an electronic copy. 
• Keeping your documents for up to seven years is recommended.  I know of some folks who keep their returns longer than that and some who don't.  Again, it depends upon your gameplan and business as to what you need to keep.
• When talking with people at the IRS, it is wise to listen and listen carefully.  I have talked with disgruntled, powerplaying people who will not talk or reason with you.  I have talked with very kind people who are willing to be of help.  It's wise to keep calling back and reach one of the nice ones and discard the bad ones.  Always be kind and courteous on the phone as this is a professional setting.  The government red tape is present and it is overwhelming to many so it is best to be ready with your form question (and yes, they are that precise).
• Keep in mind that all US citizens with earned income must file a tax return. 
• Due diligence is key to getting it all done.

  While many dislike doing the work, it is good character building.  Organizing for tax preparation is not easy especially for those businesspeople who have a lot of paperwork to review.  If anything, it is a great time to review what went right and what went wrong in your financial life.  It is an opportunity to revise your financial plan so that next year's tax season you can see what improvements or setback you've made.