GETTING READY FOR THE TAX SEASON: Are You Taking Advantage Of All Your Deductions?
DEPENDING on how you view it, April 15 comes as a blessing or a curse. Either you're looking at a hefty income tax refund or the Internal Revenue Service is looking for some money from you.
That's the situation. The deadline for filing your income tax return is just around the corner, and there's a lot to consider when contemplating the U.S. tax code.
"When you're trying to plan for your taxes, most people think they should start in April, and that's the first mistake you can make," says Toijuan Bell, a certified public accountant and owner of Stature Financial Group in Chicago. "Tax planning involves the entire year."
GET PAPERS TOGETHER
The best thing to do is make filing as simple as possible. That means saving all papers relevant to tiling your income tax return: W-2 forms, copies of medical hills, insurance statements, mortgage and car payments, investment documents, student loan papers and savings account interest statements.
Getting your paperwork together may be the hardest part of filing your tax return. Most people aren't sure what to keep and what to throw out, says Jesse B. Brown, an author and investment specialist from Chicago. When in doubt, keep the receipts and statements neatly filed and organized so that you can find them when you need them.
"Everywhere that you've gotten a source of income, make sure that you have documentation in that regard," says Brown, author of Investing in the Dream: Personal Wealth-Building Strategies for African-Americans in Search of Financial Freedom. "Secondly, you need documentation of the money that you actually spent."
SEEK TAX ADVICE
If you want to maximize your tax refund, you should be aware of the various tax deductions and credits for which you qualify. The easiest way to do that is to contact a tax planner or preparer. But if you want to do it yourself, use all of the resources at your disposal. Some organizations provide free tax advice. The IRS has a telephone helpline and an Internet site designed to answer your questions about tax preparation. The site even has a feature where you can e-mail the IRS a specific question and receive a response.
There are software and CD-ROM programs that you can install on your computer, as well as books you can check out at the local library or buy at the bookstore.
DEDUCTIONS AND CREDITS
There are some recently added tax deductions and credits about which you should know. …