Men's Life Today: Expert Q+A
My accountant charged me $350 to do my taxes this year. How can I organize myself now so I can do it myself next April?
If you’re looking to maximize your tax return potential, it’s always best to utilize the expertise of a tax professional. But if you’re determined to go it on your own, the keys are staying on top of your finances and knowing which documents to keep and leverage for maximum deduction potential.
First: Get a good tax software program.
Try TurboTax from Intuit. It can handle all the forms you’re going to work with.
Second: Get ahead of the game and start organizing your records before the end of the year.
If you’ve switched jobs, make sure you have your Social Security tax withheld from both. You don’t want the IRS poking around and potentially turning other stones you’d rather leave unturned. If you had a child during the year, get him or her a Social Security number right away; you’ll need it to file your return, and you don’t want to be scrambling at the end of the year. If you’ve moved to another part of the country for a job, collect all the expenses you incurred for the move. Your apartment search, travel and storage could all be deductable. Make sure to put those expenses on your credit card so you can easily identify them on year-end statements.
Third: Use your Outlook (or a similar appointment program) to keep track of your business dinners, travel expenses and work-related costs.
This is a great way to track all those dinners, taxi rides and other expenses for meetings in and out of town. The receipts for these events are important, but the reason for them is more important. You must have a record of these events: Who was there? What was discussed? Why did you go? Have solid records, and you’ll never have to worry about an audit.
Fourth: Show what a giving guy you are.
The U.S. Treasury wants to have a statement from each charity, religious institution, etc., to which you made a contribution, as well as proof of payments to nonprofits such as museums and universities. Organize them and draw up an itemized list of your total amount of contributions for the year.
Fifth: Keep track of any special costs incurred for your job.
If you’re a mechanic, your tools are deductable. If you’re a model, your hair and makeup costs might be. However, membership to a gym or that treadmill you purchased are not -- unless you’re looking to enter a UFC smackdown.