Family Matters

Each year I scramble to gather the information necessary to complete my tax return. What can I do now to make filing my taxes easier next year?

There are a number of steps you can take that will simplify your tax preparations next time around. Advance planning will pay big dividends in both time and money. There are two main things to keep in mind.

First, you'll want to consider the “strategic” tax-planning issues that will allow you to legally minimize your tax burden. These issues will be dependent on your particular financial situation. Sorting all this out can be fairly complicated, so it might be wise to seek the counsel of an experienced tax professional such as a certified public accountant or tax attorney. While such help is not inexpensive, these specialists can review your current financial picture as well as your goals and objectives. Together you can then formulate an overall strategy that makes the best sense for you.

I would encourage you to visit with at least two or three such professionals before choosing. Your parish or a well-established certified public accounting firm in your area can be good sources for referrals. When you begin to work with someone, remember that they are dealing with your finances. Make sure to apply your values and common sense to decisions that need to be made. Don't let your adviser talk you into actions you aren't comfortable with.

Second point: Start considering, right now, the information requirements you'll need for your return. One way to get started is to set up a record-keeping system that takes these requirements into account. With a capture-and-organize system in place, you can gather important information throughout the year — rather than waiting until the last minute, as many people do, to find important information (some of which will undoubtedly be lost). A good record-keeping system will include, along with your basic financial information, the necessary information for your taxes, such as your salary and W-2 information, self-employment income receipts, charitable-giving records (tithing and almsgiving) and investment-income paperwork. You'll also want files for other common deductions — mortgage interest, property taxes, medical bills and such.

It would also be a good idea to maintain a notebook for those miscellaneous deductible expenses you otherwise might forget about (such as automobile mileage for business or charitable purposes). Include the list of your appointments that will support these deductions.

When you sit down to prepare your return (or have it prepared for you), the information you need will be right at your fingertips. Once the return is completed, you can consolidate the files into one and store everything in a fireproof box in your garage.

Remember that the less organized you are, the longer and more frustrating it will be for you to complete your tax returns. If you pay a professional, you'll find that your fees will be substantially higher if you don't have the necessary information readily available. Finally, poor record-keeping will probably also cost you money in the form of lost deductions.

Bottom line: Start now to simplify your taxes for later. God love you!

Phil Lenahan is director of media and finance at Catholic Answers in El Cajon, California.