Get Ready for Tax Time
We haven’t yet rung in the new year and I’m already nagging about taxes. For good reason. The sooner you start to gather the necessary information, the more time you have to determine all of the deductions that you can legally take. Even though President Obama’s policies have put more money in your pocket with less withholding this year, you still need to keep good records and stay on top of the regulations to take advantage of everything you can.
Online Banking — It’s Time to Get On Board
If you do online banking, then consider investing in a Quicken, a computer program that you can use to track all of your banking and credit card activity. Most banks will let you download your activity into Quicken where you can code each item as income or expense items. Then, you can run reports and get an idea of where all the money went.
Every couple of weeks you might want to download the latest activity and reconcile it with your bank statement monthly. Then, next year, you can run a recap report with a few clicks of your mouse.
Papers, Papers, Everywhere — But You Know Where Yours Are
Another good practice to start on now is to set up a series of file folders for next year’s paperwork. You might want a folder for household bills, another for personal expenses such as clothing, groceries, and miscellaneous expenditures. You may want a folder to keep your pay stubs, another for medical and dental bills and another for your credit cards. As the year goes on, you can file away each item of paperwork after you’ve paid it. Then, at year’s end if you need it for taxes, you know where to find it. I keep all of my folders in one big expanding folder so one year’s data is all together. Then I save these for seven years. I can’t tell you how many times I’ve had to look up data from previous years in order to prove that I’ve paid for something or to double-check what I paid last year compared to this year, for example.
A good filing system together with online banking and a good computer program can make your life a lot easier and keep you informed and up-to-date on your financial condition. Your bank will have information on how to get you set up and using online banking. Most banks don’t charge you anything to use it. An added bonus is the online bill pay feature where you can program payments to happen when you choose. It’s also a big savings on postage since the bank does the mailing or transfer of money.
Now, go get started on gathering your 2011 data and while you’re at it get started on keeping your records for 2012. Yeah, it’s a challenge, but this time next year, you’ll be glad you did.
Categories: Tax News