choice.
Tip #14:
Not everyone lives in the Cloud. Some people still like the feel, texture, and smell of good, old fashioned paper. Here are some paper alternatives for folks who still like the tangible feel of paper records:
Tax MiniMiser is a system with sets of monthly envelopes to hold all your receipts, invoices, and documents—and where you can record all money you receive and money that you spend. Of all the paper systems, the Tax MiniMiser is the newest one, designed right around the turn of this century (2000) by Bob Whitaker after he got tired of being audited repeatedly. (All the other systems have been used for fifty to one hundred years or more.) http://taxminimiser.com.
Dome Record Books have books for a variety of industries that include bookkeeping information, bank reconciliations, payroll record, or whatever you need. http://www.domeproductsonline.com/dome-books.
Wilson Jones has been producing columnar pads and binders in many shapes and sizes since 1893. You can design your own journals and ledgers based on the information you need to track. Pair these pads with loose-leaf notebooks and a set of tabs, and voila! You have your own customized accounting system. http://www.wilsonjones.com/wj/us/us/s/2252/accounting-suppliesaspx.
SafeGuard One-Write Systems combines ledger sheets with carbon-backed checks and receipts. So each time you write a check or make a sale, the entry appears on your ledgers without having to copy it over. This is how I first learned bookkeeping and how to reconcile books. https://www.gosafeguard.com/business.
Accordion files can be paired with colorful labels, allowing you to customize your own filing system. Get a file with 24–31 pockets to store your receipts, invoices, and so on. Use a set with 12 pockets to store bank and brokerage statements. Or use the 12 pockets as a tickler file to remind you about monthly bills to pay, things to do, appointments or deadlines, or even birthdays and special occasions.
Should You Prepare Your Own Tax Return?
WHETHER YOU’RE A TAX Pushover, Tax Vigilante, or Tax Aware, the odds are better than 50-50 that you are among the 77 million plus Americans working with a tax professional. But another 70 million or so folks are doing it themselves. In many cases, where your financial life is straightforward and uncomplicated, you’re much better off preparing your own tax return. The IRS and all the major tax software companies even make free filing available for you. You will find two different free systems offered through the IRS right here: https://www.irs.gov/uac/Free-File:-Do-Your-Federal-Taxes-for-Free. Note: The main problem with these free services is that they don’t maintain your data files from year to year. So be sure to download and save all your data.
Tip #15:
File a tax return no matter what. Although the IRS discourages people from filing if they do not have taxable income, have refunds coming to them, or owe any write-in-type taxes, it is in your best interest to file every year. Why? For at least four reasons. Typically, you can file for free, so don’t forgo filing.
1 1. When you file a tax return, the IRS has three years to question your filing. (Add another year or two for your state.) When you file a tax return, they cannot come back to you years later saying you had income that should have been reported. It’s hard to prove you didn’t need to file when you no longer have records.
2 2. It’s quite possible that you do need to file, to report and pay 2008 Homebuyer’s Credit repayments of up to $500 per year, and this will stay in effect until 2024 or until you pay back your entire Homebuyer’s Credit. You must also file to report your income information if you received any advance premium credits on your health insurance.
3 3. If there is a 1099 issued showing any income under your Social Security number that you have not reported, you will be notified by the IRS within weeks after you file. This system helped us find more than $100,000 in bank accounts belonging to a client’s Alzheimer’s-afflicted sister. Her sister was not in any condition to tell us where her bank accounts were.
4 4. Via the IRS notification, you will also learn about identity theft—illegals (or even relatives) using your Social Security number to work, or folks filing fraudulent tax returns to generate illegal refunds. The elderly are often targets because people know you won’t be filing and won’t know you have been targeted for identity theft.
Tip #16:
You are a good candidate for preparing your taxes yourself if you fulfill the following requirements:
• Your only income is from wages, regular pensions, Social Security income, and interest income.
• You have routine dividends—nothing complicated.
• You have IRA contributions with no recharacterizations, and you’ve been keeping track of any basis (after-tax dollars contributed).
• You have a modest mortgage and uncomplicated property taxes.
• You have children with valid Social Security numbers and with documented child care expenses.
• You have a receipt for every single charitable contribution you make.
• Your children are in college but don’t have jobs or scholarships or income of their own that might prompt them to file their own tax returns.
You must file a tax return if you received advance credits from the Health Care system. A tax return may be required if you received the benefit of advance credit payments. You must file a tax return to reconcile the amount of advance credit payments made on your behalf with the amount of your actual premium tax credit. You must file an income tax return for this purpose even if you are otherwise not required to file a return (see http://content.govdelivery.com/accounts/USIRS/bulletins/1246e5b).
Tip #17:
The IRS’s Free File Alliance system has teamed up with more than a dozen major tax software companies to offer free filing of IRS and some state tax returns. Eligibility is generally based on certain income limits (around $62,000 or so), age, disability, and military service. You can find the list here: http://freefilealliance.org/free-file-alliance-members.
The reason I am telling you about this free service is that about 100 million American taxpayers are eligible, yet only about 43 million tax returns have been filed via the system since 2003. That averages about 3 million tax returns each year. Many people who could use this entirely free service are wasting it. Yes . . . free. No up-sells, no product pitches, nothing.
The only potential charge? If your state doesn’t participate in the program, you will have to pay to efile your state return. Get started here: https://apps.irs.gov/app/freeFile.
