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Tax season preparation

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Tax season is here! And it’s here to stay until April 2010.

Since the signing in of the American Recovery and Reinvestment Act (ARRA) by President Obama in February 2009, some things have changed regarding taxes. Indeed, the intent of the ARRA among other things is to preserve and create jobs, promote economic recovery and assist those most impacted by the recession. The Act specifies that one way to achieve these goals is to provide tax cuts and benefits for millions of working families and businesses. In total, $288 billion of the recovery package is to be devoted to tax cuts. This means most taxpayers will get more money in their pockets. 

You should be aware of the consequences of the law on your tax situation; you may have a pleasant surprise and learn that you will benefit from it a great deal! Don’t wait until the last minute to file your return; the earlier you file, the sooner you will get your refund! And just like the rest of us, we know you need it!

Preparing your tax documents can sometimes be daunting even if your situation isn’t that complicated. Most Americans dread the task, but once you get into it, it isn’t complicated at all. Getting organised is the key to easy and stress free tax filing. The IRS usually starts accepting returns around mid-January, so start to organise your tax return right away! To help you organise your paperwork, here are most of the documents you’ll need:

1)      The IRS tracks you by your identification number which is your Social Security number. You absolutely need to provide this number, as well as your spouse’s, and every one else who files jointly with you; parents or children for example. A missing Social Security number for any person listed on your return could cost you.

2)      The next most important thing to provide is your employment and income data. Every employee should receive a Form W-2 from their employer, showing their earnings, the taxable amount as well as taxes already withheld.

If you are self-employed, the process is a little more complicated. You must track down all receipts and documentation for business-related expenses, such as the mileage records you kept when using your car for business, the office equipment and supplies you bought, the utility bills you paid to keep the home-office lights on, etc.

3)      You also need to prepare all the paperwork related to other miscellaneous income; your last year’s tax refund, income due to letting a house or apartment, income due to pension checks if you are retired, etc. Depending on the revenue type (state refund, rental property, retirement payouts…) different forms must be completed. Make sure you know exactly which forms you need. Also, criteria may differ depending on your status: unemployed, college students, first time homebuyer, new car buyer, etc.