Over the weekend, I spent some time pulling together all of our tax-related documents. While we no longer do our own taxes, I still have to spend a bit of time organizing things before dropping them off with our tax guy.
For the most part, this is a straightforward process. Gather all W-2 and 1099 forms that came in the mail, download the few that didn’t (I cross-reference everything against MoneyDance to be sure I’m not missing anything), collect our charity receipts, and so forth.
We also have some fairly simple business-related tax issues, so I had to collect documentation supporting income and expenses on that front, but here again it was pretty straightforward.
But as I was putting the finishing touches on our pile of papers, I realized that I had forgotten several nice deductibles.
The first of these were the ad valorem taxes that we pay as part of our annual auto registrations. I had the paperwork filed away, but nearly forgot to include it.
The second was the property taxes on our home. This is a fairly large chunk of (tax deductible) change that I can’t believe I (almost) forgot about.
And finally, we bought two cars last year. Though the option to choose between deducting your state income taxes and sales taxes expired at the end 2011, Congress recently re-instated it retroactively for 2012, and going forward for 2013.
If you don’t want to save your receipts (and who does?) you can always look use a tabled value based on your income and state of residence. But even if you choose to use the table, you can still add in the sales tax from certain other “major” purchases including motor vehicles, boats, aircraft, and certain home building/improvement expenses.
It remains to be seen whether or not the sales tax deduction will come into play for us, but the car purchases are two big pieces of that puzzle.
Of course, there’s no way we would’ve forgotten these things entirely. Either I would’ve remembered (eventually) or our tax guy would’ve remembered for us. But still, it would’ve been a pain to have to dig up those documents up after the fact and send them over separately.
I went paperless. Invest in a scanner, or a good all-in-one printer with a document feeder.
Anything I can’t download, I scan in and convert to PDF at 200dpi resolution, using 2-color black and white. Also, get free PDF printing software that will convert anything you see on your monitor into a PDF file.
Anytime I get a new receipt that can be used for tax purposes, I simply copy it into my tax folder for that year.
I also used last year’s folder to remind me of all the 1099s I expected to receive from my saving/checking accounts, and my stock accounts.
I always keep my prior year’s return handy as I’m pulling things together to make sure I’m gathering what I’ll need for the current year. I use Turbo Tax which prompts you for most everything, but there are still a couple of odd items that I have to put in somewhat manually such as some of the small “nuisance taxes” (under $100) that we have–I look back at my prior return to see what I did. If you do forget something, it is a pain to go back. It’s much easier to make an amendment with Turbo Tax, however, than the good old days when you had to complete an amendment form by hand–now that was a pain!