I finally got around to completing my taxes for 2008 today (thanks to the craziness of moving a few weeks ago, and not being able to figure out if I had accounted for all my information in the process). The middle of March is pretty late for tax filing for me, as I usually try to get everything in by the last few weeks of February.
Here are a few things I’ve learned this year that I hope to apply toward making life easier next year:
- Marriage affects taxes. Usually not in a bad way, but I was “stalled” in my pursuit of the $0 refund. If you plan on getting married this year, evaluate how it will affect your taxes now and adjust things accordingly.
- Beware the free e-file. I started out with my TurboTax software in “free” mode, but ended up having to upgrade because I had investment income that required the $14.95 version to work. I wasn’t terribly upset, because I half expected it, and because I’ve respected and used TurboTax for the last 5 years. However, if you’re really shooting for free e-filing, be sure to read about what’s included before you commit to a service and realize you may have to pay.
- Save your work. After three hours of working on my taxes this morning, I was ready to file, when TurboTax suddenly said…Bzzzt! I had to restart everything, but thankfully the online program backs things up after every click. If you’re using home software or another online service, make sure they do the same, or save manually and often as you work.
- Detailed accounting saves detailed searching. Track tax-related income and expenses all year long with tax season in mind. This takes a little pre-planning to know exactly what would be considered taxable income and deductible expenses. Make sure you know in January what to look out for and discuss things with everyone else in your family, so that receipts don’t disappear.
- Not everyone is on top of things. Don’t expect to get tax paperwork from everyone you dealt with. In years past, there have been W-2 forms that never made it to my mailbox, and this year, I didn’t receive several interest statements from a few of my accounts. While it’s true that there are established thresholds for when a financial institution has to send you something (for example, I believe for interest paid, that’s $10), don’t assume that you can overlook the income if you didn’t get anything.
- Simplify your account structure. One of the main reasons I had so much legwork involved in preparing for my taxes this year was the web of accounts I’ve woven over the last several years. Many of these are inactive and serve no purpose besides…well, nothing really. I intend to close them and get rid of the headache involved in tracking mounds of paperwork.
- Business taxes are scary. Well, probably not as scary as I think. I didn’t have to file any business income this year, but I was curious and did take a peek. With the establishment of several blogs planned for 2009, business taxes are not something I am looking forward to. Hiring an accountant will be a serious consideration as things begin to pick up, especially if I decide to protect things under an LLC.
What did you learn this year about tax preparation?
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Fiscal Fizzle 
As somebody whose (self-employed) day job is being a tax accountant, I’ve gotta say: Great pointers.
Having fewer accounts and better records makes things so much easier on yourself or your accountant.
Also, just as an “fyi,” forming an LLC won’t change your (Federal) tax situation at all–assuming that your business is currently operated as a sole proprietorship.