Give yourself a head start on taxes

Tax season is here, and a head start on your taxes is just what you need to start 2012 off on the right foot. Here’s what you can do.

Create a file for your tax documents. Just as it’s useful to keep a dedicated file for bills in a specific place, your tax filing process will benefit from this first organizational step. You’ll have an easier time finding your documents and tracking the documents that haven’t arrived if you store them all in a specific file as soon as you get them.

Use a checklist for incoming tax documents. As you wait for tax statements to come in, it can help to know which documents still haven’t arrived. If your financial situation hasn’t changed much from last year, take a look at last year’s return, and start your list from there. The sooner you have all of your necessary documents, the sooner you can file for 2011, and get started on planning for the 2012 tax year.

If you had major changes in your life in 2011, compared to 2010, those changes may significantly change your tax situation. You may have gotten married, had a child, started school, or bought a house. You may have started your own business, started renting your property, or moved for work.

With any major life change, you should talk to a tax professional about how your tax treatment will change, so that you can plan for the adjustment or take advantage of credits or deductions that are now open to you. You should ask about the records you need to retrieve and save in order to claim these deductions. Include those records on your checklist and store them with your tax file.

You also can find general tax preparation checklists online from tax service providers such as Turbo Tax and H&R Block. These checklists can give you a good overview of documents you’ll need to file your return for the year.

Get your financial records in order. If you’re still waiting for your 2011 tax statements to come in, this is a great time to organize your financial records or start your financial filing system. The overview can help you spot records you need that may have slipped your mind, or remind you of tax questions you had over the course of the year.

Mark your calendar and give yourself plenty of time. The 2011 tax filing deadline is April 17, 2012. Whether you’re planning to prepare your taxes on your own or to seek help from tax professionals, it’s best to do so early. Tax preparers become extremely busy closer to the deadline, and they may not be able to accommodate you if you wait until the last minute. If you’re filing on your own, you may find the processed stalled when you come across a complicated tax question and need to find help. The earlier you prepare your taxes, the more time you have to seek answers to your questions, and to prepare a careful, accurate tax return that takes full advantage of all of the credits and deductions available to you.

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 19 years experience in retail banking and with financial institutions in Guam and Hawaii. You can email him at moneymattersguam@yahoo.com.

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