Thursday, April 7, 2011

Taxing 3

Crunch time! Tomorrow is our appointment with the accountant and I have a lot of work left to do!

I have all my papers. They are in categories and they are in chronological order. I have printed out or looked online for the missing statements.

Step 6:
It's time to pull out the calculator!
Start with one category and total up expenses from each sub-category. (for example, "Business" category: utilities, supplies, trainings, meals, etc.; for "Medical": prescriptions, copays, doctors/hospitals, etc.) Repeat ad nauseum in all categories.

When I total everything, I write the totals on a sheet of paper like this:
_____ miles
_____ goods donations
_____ cash donations

_____ office sq ft
_____ miles
_____ utilities
_____ internet
_____ advertising
_____ supplies

_____ miles
_____ co-pays
_____ Rx

Etcetera, etcetera, etcetera.

Step 7:
I realize I do not have some of my mileage recorded. I go down my list of accounts or places that fall under Medical, Charity, and Business (these are the categories that allow deductions for miles spent). I check the number of trips to the doctor, or a donation drop-off, or a business event and then google online driving direction sites (like Mapquest or Google Maps) and find the distance from my home to these various locations and write them down. In addition, I write down the number of miles I put on my car in the last year. This will help determine what percentage of my travel was devoted to business.

Step 8:
Almost finished!!
Put the sheet above in a folder with the rest of my documents: property tax info, 1099's, W-2s, mortgage interest statements, college fund contributions, my girls' social security numbers, and so forth.  

Completed! And my husband says he will reward my efforts with some Ben & Jerry's! I love ice cream, but I will definitely keep better records this year, so I don't dread and procrastinate this step again next year.

Tomorrow morning, I will hand over the contents of my folder to Joe the Accountant and let him figure out the best way to arrange everything to generate our lowest tax liability. Man, it's late-hour times like these that I am even more grateful I have an accountant!

Aren't you happy you filed your taxes already?

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