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To
gather all those W-2s and 1099s, come up with deductions and
figure how to come out ahead, you’re probably looking at pay
stubs, checkbooks, and a shoebox or shopping bag filled with
stuff you’ve collected all year that might be important to the
bottom line on your tax return.
Wow!
What an opportunity! Here’s your chance to finally get
organized so that on April 15 next year, you’ll be out playing
golf or taking your sweetie to the movies instead of sweating
over last minute entries on your 1040.
First,
what happened in 2002 that’s affecting your taxes? Here’s a
quickie checklist to get you started:
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Any
change in tax status? Marriage, adoption, parents you
provide for?
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Missing any 1099s? Brokerage accounts, interest, dividends,
etc.?
-
How
about rental income?
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Collect unemployment, Social Security, Disability, or look
for a job?
-
Win
the lottery? (Me neither…) Win or lose big in Vegas?
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Exercise stock options?
-
Buy or
sell a house…or refinance?
-
Have a
business, use your home for business, wish you had a
business because you’re unemployed and looking for work?
-
Have a
bunch of expenses because of your job teaching or selling?
-
Do
anything weird…like travel to Antarctica to save the whales?
Hey…if
any of these apply to you, you most likely should see a tax
pro. They can probably save you many times their fee by
helping you work through special situations. Don’t settle for
just anyone! Check out credentials. Enrolled agents have
lots of good ideas, and their rates are usually reasonable!
If
you’re doing your own taxes, don’t forget you and your spouse
can put up to $3000 (of earned income) in an IRA for 2002
($1000 more than in 2001). Consider a Roth, if your Adjusted
Gross Income isn’t over $160,000 ($110,000 for singles). Not
deductible this year, but not taxable – ever! Stocks and
mutual funds are cheap now. You could have a lot of money to
play with when you take it out tax free in 20 or 30 years!
Speaking
of IRAs, that old “Education IRA” has been revamped and is now
called a “Coverdell Education Savings Account” (CESA).
Instead of contributing only $500, you can now sock away $2000
for the kid’s education, and it can be used starting in
kindergarten!
Are you
an elementary school teacher? You may be able to deduct $250
up front, in addition to unreimbursed expenses in excess of 2%
of AGI. If you’re a college student, you might be able to
write off up to $3000 right on the front page of the tax
return! Are you paying off student loans? Interest up to
$2500 may be deductible if you qualify.
For
future years tax returns, including 2003, keep your ears
open! There’s a new bill currently making the rounds with
some pretty interesting stuff in it. There are some creative
things on the agenda to help you save, including brand new
credits and plans.
And
remember, while you have all that paperwork out, give some
thought to getting organized so you don’t have to go through
this again next year! Start entering things in Quicken, or on
a spreadsheet, or even in envelopes marked for taxable items.
Happy
April 15! May you have just enough of a refund for a romantic
evening to celebrate, and the rest of your money working for
you!
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