Tax Advice

Obligatory Disclaimer: I am not a Certified Public Accountant or tax expert. These are just my hard-earned lessons. Take my advice at your own risk.

I hate figuring out my taxes. No office task can make me stress out faster than the prospect of having to do the taxes. I spend way too much time poring over IRS publications to try to figure out how to do them correctly. Due to my own mistakes, and other people's errors, I've had to amend my taxes more than once and even had to defend my calculations once. We received an improperly labeled statement from an employer that went bankrupt between the time we filed and the time IRS asked us to get a corrected statement from them. Once the IRS confirmed this, they left us alone. Tax time is probably responsible for most of my white hairs.

I have learned a few lessons along the way. They may not apply to you or you may choose to make different choices. Following these guidelines, however, reduces my stress and that, my friends, is priceless.

1. Do your taxes correctly the first time. Filing an amended return is a pain in the tuckus.

2. File an amended return when appropriate. There are times when circumstances change and you can amend your taxes to get a refund. It's definitely worth the effort to do this. Also, if you are required to amend your taxes to be in compliance with the law, do it. Cheating doesn't pay.

3. If you are filing for a refund, file as early as you can. I've found refunds come more quickly before the IRS is inundated with returns in early April.

4. If you owe taxes, make sure you have the funds set aside to pay them, but don't mail them until due. You might as well earn interest on the money until you have to pay the bill.

5. If you get a large refund each year, modify your withholdings to get a smaller refund. Why let Uncle Sam be your banker when you can use the money from your paycheck to pay down your own debt (credit card and mortgages) and reduce interest costs?

6. Keep good financial records and keep receipts for everything that might be tax-deductible. If someone else prepares your taxes, talk to them about what deductions you could take if you had proof of the expense. Keep these receipts in files, organized, so that they are readily accessible at tax time.

7. Copy receipts printed on thermal paper. This is a lesson I learned just this year. About six years ago, we did a major remodeling job on the house we just sold this past year. As I gathered up these receipts to add to the basis (cost) of the house, I discovered that the receipts from Home Depot - where we spent several thousand dollars - had faded and were almost illegible. Luckily, I was able to use a copier on the darkest setting and make most of the printing visible. Now I know to do this immediately with any thermal receipts I'll need for future taxes.

8. Copy your signed, completed return before mailing. (Good record-keeping, remember?)

9. If possible, don't move to another state. Filing two state returns is a pain in the tuckus, especially since different states figure the percentages of what you owe differently. I'm not looking forward to doing 2009 taxes for this reason.

10. If you do move, save those receipts. Moving expenses are deductible last time I checked, but only if you move for a job or business. Guess we better get jobs lined up before we move!