Prepping for the Preparer- Upcoming Tax "Holiday"

The holidays are behind us, almost! There is still one more national holiday that unites us all: April 15 Tax Day. And just like we diligently clean, prepare, and organize for our Winter holidays why not do the same for this Spring holiday!

Ideally, it is always good to start early in the year in retaining and sorting out your records, important documentation of deductions, expenses, and income items. However, even if you have not organize your records throughout the year it’s never too late to start now and be way ahead the April 15 deadline.
It is during January and February that you should gather your W-2 and 1099s, and tabulate your possible deductible expenses for the year, with all supporting documentation. Be aware though that the IRS this year granted the mailing of brokerage tax forms, 1099s, an extension to February 15. Thus, getting organized with all your other documents, will be prudent while waiting for such other 1099s to arrive. If you fail to get your W-2 and 1099 by Mid- February, contact your employer and request it. If such efforts fail, contact the IRS with assistance in retriving those from your employer. Moreover, you may wish to complete Form 4852 "Substitute for Form W-2, Wage and Tax Statement, or Form 1009R, Distributions Form Pensions, Annuities, Retirement or Profit-Sharing Plans, IRA's, Insurance Contracts, etc." which will serve as a W-2 substitute for until the original one is received, or found. Not receiving these income documents timely, does not serve as a valid excuse to not filing your return.

Seek out a solid tax professional whom could help you both with organization, proper compliance, and maximizing your lawful tax benefits. Note that once tax season gets rolling it is harder to seek a prudent tax advisor. For those of you seeking more sophisticated tax planning, it is advisable to contact your tax professional(Tax Attorney, or CPA) long before December 31 of the Prior year. If on the other hand, your income tax filing is fairly simple, and you have maintained proper, sorted documentation you can use software such as TurboTax,and TaxCut to complete your return. This will minimize your cost, and you can still call your professional with questions and problem resolution along the way.

Still, if you have attempted all "cleaning", documents sorting and organization approaches by close to April 15, and seem to still not be prepared for when the "guests" are coming (IRS) –> File for an Extension, IRS Form 4868. Doing so will allow you to avoid late-fling, and failure to file penalties IRC Code Sec. 6651. Note, that if tax is due on your return, you must still pay it to the IRS by the April 15 deadline, Even If you filed for an extension. Remember to file with all applicable governmental entities in your state. In CA, file your income tax returns with both the IRS and FTB.

Also, why not start getting even better organized for next year tax season, by taking proactive measures early on in 2009. Start an organized filing system, which can be all the way from using bookkeeping software such as Quicken and Quickbooks, to maintaining written tabulations, to simply keeping your important records, deductible expense documentation in a small box, cabinet, or begs sorted by months. Also, consult with a tax professional as to Which documents are truly important, which expenses could be deductible to your particular situation and which are not. Through only maintaining the pertinent documents you will have less to sort out at year-end, and more time for you and your tax professional to engage in relevant tax planning. If your records are well maintained, kept in a secure location any case of an Audit will be a breeze, and the IRS might even be a welcomed guest.

Keep your tax and financial records for at least 3 years, the general applicable statue of limitation for the IRS to assess taxes on your income tax return, or 2-3 when your taxes involve a claim for credit or refund. Repeat the organization and filing system each year, you might even engage a friend into brainstorming about the best organization technique for you. Repetition will make the process easier, and tax season more enjoyable. You might even start to spot those great Tax "bargains", and benefit opportunities just like you know how to do when holiday shopping.