This article was originally published on Monday, 04 February 2013 as the Money Matters article in the Guam Pacific Daily News (PDN). Click here to subscribe to the PDN.
Question: This year I plan on starting early to prepare my 2012 taxes. Do you have any good tips that may help me?
I applaud you for starting early, many of us wait till the last minute to prepare and submit our taxes. Starting early will definitely reduce the stress of preparing taxes. It also gives you time to ensure that your taxes are done properly.
Some people think that they have to wait till April to start and submit taxes, when in actuality you can start preparing your taxes as long as you have your W-2 form from your employer as well as your bank, mortgage and investment interest statements. Although do note that because Congress passed new tax laws late in 2012 the Internal Revenue Service (IRS) will need some time to reprogram their computers to the new changes in the tax laws so there may be a slight delay before you can file.
•Start organizing your records. Your employers and other financial institutions by law must send out tax-related documents by the end of January. If you have not received them yet it is a good idea to start asking questions. If you have received them, put them in an area where they are easily accessible and start making a file to keep all your tax-related documents together.
Start collecting your financial documents from the past year such as cancelled checks or receipts from charitable donations, work-related expenses, moving expenses, medical and dental expenses, real estate taxes, and daycare or childcare costs. Other documentation you may need are records from supplementary income such as rental income or alimony.
You may want to use a personal finance software program next year to be able to file and manage all the information you need next tax season.
•Create a tax checklist. Having a checklist is a great way to know exactly what you need to start preparing your taxes. You can find a tax preparation checklist free online at the H&R Block and Turbo Tax websites. These lists are general lists and not everything will apply to you so just pick the items you need and disregard the ones you don’t.
•Use the correct forms. Using the correct forms is very important. You may visit the local Department of Revenue and Taxation or the post office to pick up your forms. Don’t forget that forms also are available to you through the Internal Revenue Service website at www.irs.gov. They have a comprehensive list of forms and publications that you can search through and print right at home.
Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at email@example.com. To read past columns visit the Money Matters blog at https://moneymattersguam.wordpress.com.