News

advertisement
february 23, 2013 • 05:32 PM

How to Keep Your Zen During Tax Season

 

If April 15 brings with it a desire to stick your head in the sand, ostrich-style, here are five recommendations to make settling your annual bill with Uncle Sam easier.

1. Keep good records all year long.

If you are going to want to claim a deduction, you have to have a receipt for it, says small-business tax expert Russell Fox, a principal at Las Vegas, Nev.-based Clayton Financial and Tax and the author of Tax Strategies for the Small Business Owner: Reduce Your Taxes and Fatten Your Profits  (Apress Media LLC, 2013). Also, those receipts will be your defense if you are ever audited by the Internal Revenue Service.

2. Keep Social Security numbers under lock and key.

"Identity theft is a huge epidemic the IRS is facing," says Fox. This year, there has been a surge in scammers defrauding the IRS by filing false refund claims using stolen Social Security numbers, especially in Florida. Business owners have to have the Social Security numbers of their employees, but they should keep those files locked away in a filing cabinet to avoid being the gateway for a scammer.

3. Enter your expenses in your accounting software regularly.

Accounting software like Quicken is useful, but only as useful as an entrepreneur is diligent about entering his or her financial information throughout the year, says Fox.

4. Bring all of your financial documents for your meeting with your tax professional the first time.

Have all of your documents, such as a 1099 form, with you when you visit your accountant, in addition to any other forms on a checklist that may be provided by your tax professional. Make sure your profit and loss statements are complete. If you have any special concerns, email your accountant ahead of time, says Fox.

Being prepared for your meeting with your accountant is especially critical this year. Fiscal cliff negotiations in Congress went right up to January, and those negotiations included several provisions that required the IRS to amend its ancient computer system. Accountants have been jammed up because the IRS hasn't been able to accept certain tax forms until about a week ago and some are still not being accepted. That's going to make the rush leading up to April 15 all the more severe, says Fox.

5. Have a backup for your files.

About five years ago, Fox's computer hard drive failed about two weeks before April 15. Thankfully, he had a backup. To be sure it works, try to actually restore a file from that backup.

Entrepreneur - All rights reserved.