Get
It Together
March 30, 2000
By Liz Kelley Kerstens, CGRS
This
column is posted on the Clooz.com Web site with
permission of MyFamily.com. The
column was originally posted on the Ancestry.com
Web site.
Tax Day Approacheth!
I doubt that I’m the only one that hasn’t completed
and submitted my income tax return yet. April 15 is
looming ever closer, however, and it’s time to buckle
down. I have plenty of excuses, the most common being a
lack of time. I actually started the process about three
weeks ago but just haven’t completed it yet.
My forward motion on this issue is not hampered,
however, by a lack of organization. I made it a point
several years ago to do myself a favor when it came to tax
time. I prepare for my taxes all year long instead of that
narrow window between January and April 15. In my
reference file cabinet, I have one file that is called
"This Year’s Taxes." I have another that is
labeled "Next Year’s Taxes" so that when the
New Year rolls over, I have a place to put the new year’s
tax receipts. Every time that we generate a record of some
sort that will be used to prove a claim for income tax
purposes, that record is placed in the appropriate year’s
hanging file folder.
Another way of helping out all year long is to use a
money management program. I use
Microsoft
Money, but
Intuit’s
Quicken is just as useful. These programs are
delightful for a variety of reasons. You can set them up
to remind you to pay bills, and to remind you that
automatic payments and deposits are affecting the balance
in your checking account. You can use the program to help
balance your check book and to help you keep track of
investments. And each entry you make can be categorized to
assist with tax preparation later. In fact, the programs
have become so effective that as long as I keep up with my
entries throughout the year, I don’t worry about going
over each and every item to ensure it is correct.
For my business, I use
Intuit’s
Quickbooks, which can also be set up for efficiency at
income tax time. As long as I’m diligent in entering
business transactions, I don’t have to worry at tax time
that I’ve left something off. Data entry like this
throughout the year takes discipline and can get tedious.
But the rewards at tax time are worth it. When I generate
a business transaction, if I don’t have time to enter
the information into Quickbooks immediately, it gets put
into a "Data Entry" folder in my Permanent
Action Files on my desktop (see the Get It Together column
of 12
January 2000). When I have time to do data entry, the
receipt, once entered, is placed in the Business Receipts
hanging file folder in my business filing cabinet. I keep
all receipts for one year together and once I’ve filed
my income tax, those receipts are stored with the income
tax paperwork for that year.
When it comes to actually preparing the income tax
return, I use
Block
Financial’s Kiplinger TaxCut. I’ve used the
program for several years and have been quite happy with
its interface with Microsoft Money and the tips and
interview process that it contains. There are other tax
preparation programs, naturally, including
Intuit’s
TurboTax and the new kid on the block,
Microsoft’s
TaxSaver. The first two programs now offer you the
option of doing your taxes online instead of purchasing
the software. I purchase the software and work on my taxes
on my hard drive, just for that added comfort factor of
keeping my data private.
One of the advantages of using these software packages
is that they will first ask you if you prepared your taxes
the previous year in the software. You can import last
year’s tax return so the program will already know a lot
of your information and you don’t need to rekey it.
Then, you can import data from your money management
program and since you’ve categorized the entries, the
program knows just where to put the data. The only part
that is missing is that I can’t then have the tax
program look at my business accounting program and place
the information in the appropriate spaces. I have to do
that part manually. Maybe on next year’s wish list they’ll
help me out!
Tax time doesn’t have to be a negative, overwhelming
experience. You can do yourself a favor for next year and
start keeping track of this year’s expenses and filing
the paperwork together in a file folder dedicated to next
year’s tax return. If you have money coming, you might
even get motivate to file early and put your money to good
use right after the holidays. Happy taxes!
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