Keeping Good Records as Tax Season Approaches

Setting aside some time to organize your financial records can help take some of the stress out of tax season. In addition to facing April 15th confidently, organizing your records can also help you maintain your financial well-being.

Having your information complete and sorted allows you to check for errors as well as resolve any issues you might find quickly and easily. You’ll also be glad you took the time to keep good records whenever you apply for a loan or if you are ever audited. Additionally, being able to examine all of your finances at once can give you a clearer picture of your fiscal situation. And, best of all, keeping your records in order may be easier than you think!

While there are a number of suggested financial filing systems out there, it’s important that you organize your information in a way that makes sense to you. While you can establish elaborate filing systems with locking filing cabinets, all you really need to get started are folders, labels and a safe place to store them. Make sure that your sensitive documents are well protected from flood, fire or intrusion.

There is no limit to the number of things you can file, but some items need to be kept organized and accessible. These include:

Bank records
Employment records
Loan records (including mortgage)
Tax returns for the last 7 years, as well as current year information
Insurance policies
Investments, such as stocks, bonds and annuities
Personal records

While organizing your records can seem daunting, don’t be overwhelmed. Simply set aside a generous block of time, plenty of space and go at your own pace. Decide on the categories you want to file your records under, then separate your documents into these categories. Though it’s essential to keep important files, you may discard items that are not required. Remember to shred old documents to help safeguard against identity theft.

Finally, sort each category by date for easier reference. Then label and file your information in a way that makes sense to you. Congratulations! You’ve taken an important step for your financial health — and you won’t have to dread digging through stacks of paper at tax time!

Tip of the Month: Planning Ahead for your Taxes

With a few simple preparations, you can breeze through tax season stress-free. Tax day never comes as a surprise, so getting ready in advance can help keep you on the right track. While some suggestions may seem like common sense, it’s easy to lose your head if you’re scrambling to find your records at the last minute.

The first step to being prepared for tax season is to decide well in advance how you would like to file your taxes. There are a number of filing options available including tax professionals, tax software, accountants, or simply filling out the forms yourself. Everyone has personal preferences when it comes to taxes — just be sure to choose a method you feel comfortable with.

Once you’ve decided how you’re going to file, be sure to gather all the documents you’ll need to help make the process smooth and efficient. Refer to your last year’s return to determine what documents you will need. As you receive tax documents from your employer, banks and other institutions, be sure to keep them together in a safe location for easy reference. It’s a good idea to have these important documents on hand and reviewed for accuracy before you even begin the filing process.

Finally, if you’ve had any major events or life changes in the past year, you might need to include that information on your tax return. Some of these changes could include a birth or death in the family, marriage, divorce, new employment, disability or the purchase of a home or vehicle. Information on these life changes and how they impact your taxes can be found on the IRS Web site at www.irs.gov. These simple preparations can really help take the confusion and stress out of tax season.

This Month’s Poll Question:

As you’re gearing up for tax season, we want to know how our newsletter readers file their taxes.* Be sure and check back next month to see which tax filing system is the most popular!

How do you plan on filing your taxes this year? ( surveys)

Previous Poll Results:

Last month, we asked you if you had ever used Equifax’s online dispute resolution process. Over half of our poll responders say they have never had to initiate a dispute. We hope you'll never have to initiate a dispute — but if you do, be sure to check out the new and improved Equifax online dispute resolution process. We’re confident that you’ll find it to be simple and straightforward.

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Your net worth is the value of all of your assets, minus the total of all of your liabilities. Put another way, it is what you own minus what you owe. If you owe more than you own, you have a negative net worth. If you own more than you owe you will have a positive net worth. This calculator helps you determine your net worth. It also estimates how your net worth could grow (or shrink!) over the next ten years.

Did You Know?: How Should You Spend Your IRS Check?

informa research services If you are eligible for a tax refund, the government is giving you your money back! Tax refunds will soon be making their way to mailboxes or bank accounts of those who qualify! Last year, the average tax refund was $2,345 (Source: IRS.gov), and while that’s not enough to completely revamp one’s living, invested correctly, it can possibly yield relatively large returns. So when you get your IRS check, what could you do with it?

Save A Little Bit
Due to the current economic market conditions, saving your money is definitely a formidable option that should be seriously considered. For instance, if you are in an industry that is affected by the changing economy, you may want to think about fortifying your savings and retirement nest egg with the extra funds you may receive from your tax refund.

The saving options available are anything but few and far between. To get the best deal for your unique situation, shop around and consider all your options before committing to a banking product. Be sure to consider criteria such as accessibility of you funds, your savings goals, and as always, aim to find the best possible Annual Percentage Yield.

Hey Big Spender!
While some may choose to save, you may choose to spend that refund check like there’s no tomorrow!

Before you run out and decide to splurge on the latest technology trend, consider spending your money on something that can increase your assets. For instance, if your refund constitutes a large enough amount, adding a fresh coat of new paint to your home instead of adding a new coat to your wardrobe can help maintain the value of your home.

However, if you decide to invest your money, find the best available rates online by using rate comparison tables to get the biggest bang for your buck!

For help finding banking rates, try the Equifax Rate Finder: http://learn.equifax.com/banking-loans/