Prepare Your Own Tax Return - Save Money!

Regardless of who prepares your tax return or which tools you use, you should understand the tax laws as they apply to you. YOU are responsible for the information on your tax return. You need to be confident that the information on your return is accurate before filing with the IRS. There are many tax software programs out there that will help you to maintain accuracy in your calculations.

Preparing your own tax return is economical, many of these tax software programs are a fraction of the cost of professional tax services. You can work at your own pace, and best of all, it provides valuable insight into your finances.

During the year, keep your records organized as you acquire them! It is difficult to remember where everything is a year later. Do yourself a favor:

1. Start by setting up a file (or several categorized files, if necessary) and give it a label. Do this now for next year's tax season (i.e. "2009 Tax Documentation") and even better, make it a part of your New Year's resolution every year. As your documentation is received, take the minute or two to file it immediately. Be diligent about it and you will be glad that you did! Keeping it all in one place makes it so much easier to simply grab it and go at tax time. You can find detailed information on record keeping, as well as a wealth of comprehensive tax preparation information, including your specific filing requirements, on the IRS website.

2. Be sure that you have received ALL pertinent tax documentation before you begin your tax preparation. If you do not receive your W-2 or 1099-R form, by January 31st, or if it is incorrect, the IRS instructs taxpayers to contact the company/payer responsible for issuance. If you do not receive the corrected version by February 14th, you can contact the IRS directly. I've provided a link to the appropriate IRS page for specific information regarding this here.

3. Use a reliable tax software or online filing service for filing your tax return. There are several options out there that are designed to take the guess work out of it, making the process less stressful while maintaining accuracy. Click here to see some of these products.

4. Efiling can save you both time and money. You can:

• Get your refund faster with direct deposit
  
• Save paper - a more environmentally conscious method
  
• File your taxes at your convenience, at any hour, day or night
  

5. If you feel that hiring a tax professional is the best option for you, set your appointment early. Place a reminder for yourself on your December calendar to set your tax appointment for the upcoming season. If you wait until tax season is upon you, you may end up waiting for weeks, or even worse, scrambling for any appointment at all. One simple call can mean the difference between having your refund (if you are eligible) right away versus getting caught up in the multitude of last minute filers and having to wait for processing.

Don't wait until the last minute! You'll be more relaxed and less likely to make errors. it can be difficult to concentrate when you are under duress. Errors are more likely to occur.

If you're using the old-fashioned paper method, have last year's return handy as a cross reference sample.

Check each tax form as it comes in to be sure that all information documented is correct. It can take a little time to receive the corrected documentation.

Save your work! If you are using a software that permits it, saving your progress periodically will protect you from losing all that you've accomplished.

It is important to stay informed of any tax law changes each year. Here is a brief overview of some of what is new for filing your 2008 taxes. As always, check with the IRS for criteria and eligibility regarding these and other changes.

Economic Stimulus Payments Are Tax Free, and according to the IRS as of the time this was written, they are not reported on the 2008 Tax Returns.

Alternative Minimum Tax Exemptions Increased for One Year For the 2008 tax year, Congress raised the alternative minimum tax exemption to the following levels:

• $69,950 for a married couple filing a joint return and qualifying widows and widowers, up from $66,250 in 2007
  
• $34,975 for a married person filing separately, up from $33,125 and
  
• $46,200 for singles and heads of household, up from $44,350
  

These exemptions will drop for the 2009 tax year under current law.

Tax Breaks Renewed Some tax breaks that were supposed to expire were extended, including the deduction for state and local sales taxes, educator expense deduction, tuition and fees, among others.

Standard Deductions Increased The IRS listed the basic standard deductions as follows:

• $10,900 for married couples filing a joint return and qualifying widows and widowers, a $200 increase over 2007
  
• $5,450 for singles and married individuals filing separate returns, up $100 and
  
• $8,000 for heads of household, up $150
  

Adjustments in these amounts may apply depending upon your personal situation.

First Time Homebuyer Credit on homes bought from April 9, 2008, to June 30, 2009, more details apply, check to see if you qualify.

More...You can find information on these and other tax law changes here.