Tax Organization Tips – April 2012

The Shaw Atlas
April 15, 2012Welcome
Welcome to The Shaw Atlas, the monthly newsletter from Shaw & Associates, CPAs & Financial Advisors. We look forward to keeping you abreast of ever-changing tax codes, providing you with money saving accounting tips and illustrating proactive strategies to help you achieve the financial life you envision.

Newsletter contents:
Important Deadlines
Shaw & Associates Finalist for Small Business of the Year
Cut the Chaos – Tax Organization Tips

Important Deadlines

If you make estimated tax payments, be sure to mark your calendars.

Estimated payments are due:

  • April 17, 2012
  • June 15, 2012
  • September 17, 2012
  • January 15, 2013

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Shaw & Associates Finalist for Small Business of the Year

We are honored to announce that Shaw & Associates has been chosen as one of six finalists for the Fort Collins Area Chamber of Commerce Small Business of the Year Award.

This would not be possible without our dedicated staff and our outstanding clients. Thank you!

Other nominees include AlphaGraphics, Brinkman Partners, The Cupboard, MazTech & All-Tech Automotive and Palmer Flowers. Awards for companies between 1-10 employees and 11-50 employees will be announced on April 25, 2012 at the Business of the Year Awards Luncheon.

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Cut the Chaos – Tax Organization Tips
Kareen Larsen, Kevin’s most organized client

Was preparing all of your documentation for tax time a little rough this year? Did you spend hours searching through piles of paperwork only to realize that half of your records were missing? It is time to put an end to the chaos and get seriously organized.

But I just finished my tax return and I don’t want to think about it for another year, you say? Change your tune. Getting your tax life in order right now will make a huge difference next tax season. These tips will help you put your best tax foot forward.

Be File Friendly

Whether electronic or old fashioned manila files, maintain a filing system that works for you. Know what categories of information that you will need for tax time and keep a file folder for each one. Ongoing expenses such as medical expenses, childcare expenses, real estate tax information, home improvements, and charitable donations can be easily tracked throughout the year. When tax season rolls around, simply pull out your file folder and calculate your total expenses.

Keep a Master File

Right away, create a file named “For My Accountant – 2012”. As taxable or deductible events occur throughout the year, put the related documents and information in your master file. These are events or expenses that may not necessarily be the same from year to year. Common “taxable or deductible events” are the purchase or sale of a home, refinance of a mortgage, purchase or sale of stocks, bonds or mutual funds, educational expenses, moving expenses, or contributions to a health savings plan, education fund, or retirement plan. This way you won’t have to try and remember what events occurred of the past year potentially missing tax savings. If you are unsure if something is taxable or deductible, put it in your master file so your accountant can review it when preparing your tax return.

Keep a Mini File

If you own your own business or incur un-reimbursed expenses for work, it can be difficult to track your expenses. Keep a small plastic accordion file in your glove box or lap top bag. As you incur expenses, immediately put your receipt in your accordion file so they are all in one location. If you deduct actual vehicle expenses, keep your gas, car wash, and auto maintenance receipts. Your mini file is a great place for business meals or entertainment receipts. Keep a small pad of paper and pen as well. Track business miles, medical miles or miles driven for charitable purposes. You will be surprised how easily you will develop the habit of keeping your receipts. Stay motivated by equating your receipts with tax deductions and tax savings!

Create a Template

Instead of trying to remember all of your deductions from year to year, create a personalized template in Excel. This will help you organize your home office deductions, your investment information, your personal tax deductions or even your rental properties. For example, if you have a home office, create a template with space for utility bills, cleaning and maintenance expenses, mortgage interest, improvements, etc. Leave a spot for home office square footage and percentage of space used for business. Use the same template each year. This will not only help you compare your expenses from year to year, it will avoid forgotten deductions or commonly missed deductions like home improvements that enhance your business space.

Taking a few minutes to get organized now will save you hours of time next tax season. More importantly, keeping track of all of your expenses will help ensure that you are able to take advantage of every tax deduction available to you and keep your tax liability as low as possible.

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April 17th Marked Tax Freedom Day

Determined by the Tax Foundation, Tax Freedom Day is the first day of the year in which Americans collectively have earned enough income to fund the annual tax burden. This year Tax Freedom Day fell on April 17, four days later than last year due to higher federal income and corporate tax collections. Theoretically, after Tax Freedom Day, Americans have “paid” their collective tax bill and are now working for themselves rather than the government.

Tax Freedom Day is determined by dividing all federal, state, and local taxes collected each year by the country’s total income. It does not take into account deficit spending. According to the Tax Foundation, if the federal government raised taxes enough to close the budget deficit (an additional $1.014 trillion) Tax Freedom Day would come on May 14 instead of April 17. Historically, the latest Tax Freedom Day was May 1 in 2000. That year collectively, Americans paid 33% of their total income to taxes. Conversely, in 1900 Tax Freedom Day was on January 22, meaning that Americans, at that time, paid 5.9% of their income in taxes.

 

Help Shaw & Associates Support Relay for Life

On Friday, May 4, 2012 we will be participating in a Zumbathon to raise funds for Relay for Life and cancer research. Interested? Click here for more information.

 

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