Tax preparation and filing tax returns can be a difficult and
tiring task. More pressure is added if your tax return is very complex
such as when you have multiple sources of income, several properties,
have a family and dependents, etc. The best way to deal with pressure is
to prepare months in advance. Managing tax information throughout the
year can be done better by doing it proactively, managing it as it
happens and not cramming just as when tax season is just around the
corner.
To make tax preparations easier, you might consider organizing your record keeping system. You can do this by creating separate files for related items. Receipts and payments should be both organized by date and category but kept in separate files.
It is also a good idea to keep a file of your tax returns for the past few years for easy access in case you need to review them for items that can affect your current year's tax return. Having organized records does not only make your tax preparation easier, it also makes it less frustrating since you won't have problems looking for any missing documentation.
When organizing your record keeping, you should always keep in mind what are the records you need to keep. The most important documents to keep are those that are proof of your income and expenses as these determine how much tax you are going to pay as well as how much can be deducted from your expenses.
For proving your correctly claimed income from investments in stocks, bonds, or mutual funds, you need to determine your basis for income and whether to consider a gain or a loss. Related documents for your investments should include the purchase price, commissions paid, dividends received, stock splits, and the sales price of said investment.
For proving the deductibility of your expenses, you might need to keep proof of payments such as credit card receipts or cancelled checks, as well as other receipts, invoices, sales slips or any other document with a description of your transaction. Deductible expenses that need to be documented include alimony, charitable contributions, child care expenses, mortgage interest, and real estate tax. Withheld expenses such as medical insurance premiums, union dues and taxes withheld are also considered as deductible expenses.
The legally required time period for you to keep your tax records is three years from the date of the tax preparation and filing the tax return but it is suggested that you keep them indefinitely in case you may need information from them in the future.
To make tax preparations easier, you might consider organizing your record keeping system. You can do this by creating separate files for related items. Receipts and payments should be both organized by date and category but kept in separate files.
It is also a good idea to keep a file of your tax returns for the past few years for easy access in case you need to review them for items that can affect your current year's tax return. Having organized records does not only make your tax preparation easier, it also makes it less frustrating since you won't have problems looking for any missing documentation.
When organizing your record keeping, you should always keep in mind what are the records you need to keep. The most important documents to keep are those that are proof of your income and expenses as these determine how much tax you are going to pay as well as how much can be deducted from your expenses.
For proving your correctly claimed income from investments in stocks, bonds, or mutual funds, you need to determine your basis for income and whether to consider a gain or a loss. Related documents for your investments should include the purchase price, commissions paid, dividends received, stock splits, and the sales price of said investment.
For proving the deductibility of your expenses, you might need to keep proof of payments such as credit card receipts or cancelled checks, as well as other receipts, invoices, sales slips or any other document with a description of your transaction. Deductible expenses that need to be documented include alimony, charitable contributions, child care expenses, mortgage interest, and real estate tax. Withheld expenses such as medical insurance premiums, union dues and taxes withheld are also considered as deductible expenses.
The legally required time period for you to keep your tax records is three years from the date of the tax preparation and filing the tax return but it is suggested that you keep them indefinitely in case you may need information from them in the future.
Minimize your tax payable and maximize your tax savings now, inquire for a Sacramento tax preparation ca service now at Capital Tax Services Inc's website ctssac.com
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http://EzineArticles.com/?expert=David_YaffeeArticle Source: http://EzineArticles.com/7514516
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