Gathering the information you need to prepare your tax return can be a real hassle, and it is very easy to procrastinate when doing your taxes. But if you organize your forms and records and find answers early, you can finish your taxes sooner and enjoy more time with your family and friends.
1. Put all your tax documents (the ones that say "Important Tax Information Enclosed") in one place. You should collect the following:
W-2 forms reporting your 2001 income from each employer. Call your employer if you haven't received it yet.
Records of other income, such as alimony, self-employment or business partnerships or other entities.
All 1099's (which report dividends and interest) from your banks and brokerage firms. Be sure to keep the instructions, which explain what each box really means.
Receipts -- for itemizers. If you record all your expenses in finance software like Quicken or Microsoft Money, you can run reports to find out how much you spent on mortgage interest, real estate taxes, investment expenses, medical expenses, charity and so on. If you don't use finance software, then gather your receipts. Collect medical receipts only if you think you spent more than 7.5 percent of your income on medical expenses.
Statements showing the buying and selling prices of stocks or mutual funds you've sold to calculate capital gains and losses may also be necessary.
2. For bigger tax savings, contribute to a tax-deductible IRA by April 15, 2002. Find out if you're eligible for the deduction.
3. Buy Quicken TurboTax or Kiplinger TaxCut software. These programs and Web sites help you find legitimate deductions and could save you hundreds -- if not thousands -- of dollars. If you're comfortable storing tax information on the Web, you can file returns using TurboTax for the Web, which is cheaper than the software.
