Its Tax Time Again - Get Started Early and Save Money

Ah, it is tax time again. Time to render unto Uncle Sam what is Uncle Sam's and not a penny more if you are smart. While you have until April 15, you should be starting now to get your ducks in a row.

Whether you are doing your own taxes are using a local tax specialist, having all your financial data together will save you money. A little organization is in order.

If you are computer literate, simple accounting programs will save you a bundle. Quicken is the one I use now and it is very easy to set up. Most banks offer on-line banking and Quicken easily downloads bank statements. This makes my tax life much simpler. Most tax categories are automatically recognized by the Quicken accounting program, saving on set-up time. You will need to check deposits to make sure they are recorded properly if you have more than one source of income. If you use a lot of checks, you will have to verify the payees and memos.

I use a debit card for virtually all my expenses. This allows the quicken program to easily sort transactions based on point of sale. As an independent contractor, I need to track all of my expenses that are deductible. This is so much easier than sorting through hundreds of paper receipts.

You do need to keep the paper receipts, but now you can just keep them in order in one folder. Cash transactions are the receipts you really need to keep in order. Every year I am having fewer cash transactions to deal with making tax prep work much faster.

If you are not computer literate, well it is a bit tougher. One easy way is to separate receipts by general category in envelopes. Write a brief description of each transaction on the outside of the envelope to make your life easy. Unless you are new to taxes, you will have good idea of which receipts are important so you can eliminate a lot of clutter.

If you are new to taxes or feel there is more you should know, check with the tax specialist you are planning to use early. They will have a simple list of what you should have and the order they should be in. If you don't have an accounting program, ask what program they use and get one that is compatible.

Whether you should use a tax specialist or full-blown CPA depends on the complexity of you business and your confidence level. I am pretty confident in my accounting and tax preparation skills. If you are confident as well, the best local tax specialist for you might be Turbo Tax. This is a very simple tax program that is compatible with Quicken and most other accounting programs. If your business is more complex, Quick Books or Peach Tree accounting programs offer more accounting options than Quicken.

While there are plenty of tax specialists like H&R Block, I prefer to use a local accountant. A local accountant does not have to be much more expensive than the tax services if you are properly organized. A tip to make an accountant more affordable is to file an automatic extension. This gives you until August 15^th to complete your tax filing.

With the extension, schedule your appointment with the CPA for May. He/She will much less on their plate and will offer you a much better rate.

Big tip:

Remember as a writer, you may have a lot more deductible expenses that you think. If you wrote about that vacation or fishing trip, some or all of the expenses may be deductible. That new camera or Video recorder, they are deductible. Your computer is also deductible. This a great reason to pay a visit to a CPA if you are new to writing.

While all of your tax information may not be in great order this year, starting early for organizing your 2006 filing will give you plenty of ideas how to make 2007 easier. So bite the bullet and get started early.