Financial Wellness 2011

Tax Preparation

By Doreen L. Rosenberg Principal, Accounting & Tax Associates Inc. With the holidays over, it's now time once again to start thinking about getting your taxes done. This year you will have until April 18 to file but if you're expecting a tax refund, why wait? Here are a few hints to get you ready and keep the pain of preparing taxes to a minimum. First thing you need to do is to get organized. Hopefully you remembered to start a 2010 tax folder and have been putting in your W-2's to report your wages, your 1099R's for any retirement received, 1099's to report your interest and dividends, any 1099B's to report your stock and bond sales along with your 1098's for deducting your mortgage interest and real estate taxes. If you collected unemployment you will receive a 1099G; if you had any gambling or lottery winnings you should have a W-2G. All of the above are required to be in the mail to you no later than Jan. 31. Next, you will need to organize your records and receipts. For you organized people, it shouldn't be too difficult; for the other 90 percent of you, start sorting through everything and putting them in some sense of order. Start by sorting them out into the different tax-related categories. Remember you will need receipts for all charitable donations. If you have rental property, it is extremely important to have all of the receipts in order for you to take the expenses in maintaining the property. You never know when an audit will happen and without the required receipts along with proof that you paid them, the deduction will be disallowed. Next, you need to get informed. Do you have a dependent in college? You may be able to take advantage of tax credits. What about any energy efficient improvements to your home. Did you replace any windows and / or doors? If you did, you need to keep a copy of the invoice as well as the specifications to prove that you bought the correct energy efficient models. For those taxpayers over 65 years old, you may be eligible for the state Circuit Breaker Credit. This is a credit for the real estate taxes that you paid on your Massachusetts property or on rent that you paid. Last, but not least, is to find a competent tax preparer. Get a referral from someone you trust. Your tax preparer can become a very important part of your financial future. Doreen L. Rosenberg is Principal of Accounting & Tax Associates, Inc. To contact her, please call 525-0862.