Get Ready, Get Set, Go...

Over the past several weeks, we have tried to provide you with as many tax saving and planning ideas and tips as possible and we will continue to do so in the weeks moving forward. However, today, let’s take a moment to step back and get ready for the onslaught of paperwork, and for some out there, the stress that so often is associated with tax season. Even if you have a CPA prepare your taxes for you, dealing with and organizing the paperwork can cause unneeded stress for individuals if they aren’t ready for it and properly prepared to handle it. At McArthur & Co, we provide our clients with Client Organizers to help with the process of getting your paperwork organized as it arrives allowing it to be passed on to the CPA without anything falling through the cracks or any sort of delay developing. What you’ll read today is not rocket science, but it can make your life less stressful if you’re willing to put some of these simple steps into practice.

• Have a Dedicated place for your Tax Related Information: The documents have begun to trickle in for some of you and the stream of paperwork is only going to increase. As these documents (W-2’s, 1099’s, etc.) come in the mail, don’t just casually place them to side to deal with later. Make it point to store these documents in one location so that you aren’t searching throughout your entire house to find that one 1099 that you know you opened but can’t seem to put your hands on.

• Useful Categories: In addition to have a dedicated location for all of your tax documentation, it is also helpful to categorize your information according how it works into your tax return. Here, you can get as specific as you’d like, but should at the very least have a folder for Income Items, Deductible Items, Charitable Contributions, Investments. When an item is received in the mail, open it up, take it to your dedicated location for storage and then place it in the applicable folder. When it comes time to pass it on to your CPA, you’re ready. If you’re preparing your taxes on your own, this will significantly cut down on the time you spend sorting through the paperwork.

• Know what you Need: Half the battle is simply knowing what information you need to have to complete your return. The below list is by no means comprehensive, but it provides a guideline of some common items that should be noted, recorded, and/or received/reported:
1. Original W-2 forms reporting wages, salaries and tips.
2. All 1099 forms for interest, dividends, miscellaneous income, state refunds, or
retirement income.
3. All year-end, December 31, 2009, brokerage statements showing investment
transactions and any accompanying brochures received related to mutual funds.
If you sold any stocks or bonds, then you will need the original purchase price
and date if not provided by the brokerage statement.
4. Schedule K-1 showing income from LLC, Partnerships, S corporations, estates,
and trusts.
5. Statements supporting deductions for mortgage interest and real estate and
personal property taxes (autos, boats, etc.).
6. Details of any out-of-pocket medical expenses, including medical insurance
premiums and long-term care insurance premiums. Don’t forget medical miles if
significant. Do not include amounts reimbursed to you.
7. A list of charitable contributions (be sure and note those that are non cash), and
don’t forget charitable mileage. NOTE: All contributions must be traceable to a
canceled check or credit card statement. This is in addition to required receipt
from organization for contributions of $250 or more.
8. Details regarding any possible tuition credit or education interest deduction
(1098-T).
9. Income and expenses related to any small business you might have.
10. Rental income and expenses related to any rental property you might have.
11. Did you make any contributions to any sort of Individual Retirement Account? If
so, make sure you have the details for the amount and the type of IRA (Roth,
deductible, or non deductible).
12. For any estimated taxes you might have paid know the amount paid, the dates
they were paid, and to whom they were paid.

The above three steps seem so very simple, but you would be surprised how often they are overlooked. The result is frequently undue stress, delays in filing returns, and inability for individuals to take full advantage of their tax saving opportunities. Take the time and make the effort to implement these three steps and you will have the ability to take control of tax season instead of tax season taking the control of you.

info@mcarthurco.com
704.544.8429