Tax Preparation – The Turn of the Year

We’ve turned into the new year and a new beginning. Unfortunately, that new beginning starts off with thoughts of taxes. Yes, it is the time to start thinking about your business and personal taxes. Here’s how to get through the process without going insane or yelling at your kids because of the stress.

Tax preparation is simple. Okay, I’ll wait a minute while you laugh at that one. Preparing your taxes is a pain in the derriere and there is no denying it. The key is to not let it overwhelm you and the key to that is to avoid trying to do it all at one time. Most people sit down and try to do the dirty deed all in one evening. This is a recipe for disaster and also sets you up for a potential audit because the rushed work usually has errors in it. Math errors are one of the top reasons people get audited. That’s probably the last thing you want to have happen.

So, how do you go about this without going mad? The best approach is to do a little bit at a time, to wit, to bit off chunks you can handle. Allocate two hours a week to work on it. The first week should be spent getting all your tax documents in order and sending off for copies of those that have been lost/ripped up/used as food trays. The second week can be spent making sure you have all the tax forms you need for both your federal and state returns. The third week can be spent going back and getting the forms you missed in the second week.

After that, it is time to sit down and prepare your taxes. Again, the key is to divide things up by task and subject. The first should be to create a collection and memo on all your taxable revenues including salary income, independent contractor income and so on. Now gather up all your capital gains documents and so on. The next week, focus on any tax credits you might be able to claim. The fourth should be spent on tax deductions. The order you pursue these things in does not matter.

The key to tax return preparation is to take them in small chunks so that your information is accurate and you don’t drive yourself insane. Figuring out your self-employment tax can be difficult, but it isn’t impossible. Figuring out your self-employment tax, capital gains, business income and itemized deductions all in one sitting is enough to make anyone start talking in tongues. Save yourself the aggravation. Make a plan and stick to it. Before you know it, your taxes will be prepared and you’ll still have a spouse that speaks to you!

Richard A. Chapo writes for BusinessTaxRecovery.com where you can get help with a IRS wage garnishment problem.