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Home › Articles › Money Management › It's Tax Time Again

It's Tax Time Again

Expert Help for Families

By Megan L. Fowler

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It's that time of year again. The looming April 15 deadline will rear its ugly head sooner than you think, and your annual income taxes will need to be filed.

The very thought of shuffling through 1099s, W-2s andyour expense receipts, all the while tallying up your 401(k) and IRA earnings, is enough to give even the most organizedcouples heart palpitations. So relax, take a deep breath and consider this advice from the best in the biz.

Keep Your Head in the Game
The first thing you need to do is get organized. "Think through the year first and note all important events that occurred and their tax relevance," suggests national tax compliance manager Stan Pollock in San Francisco. "Gather your information up front, and put everything where you can reach it." Only then do you sit down to do your taxes.

"Be calm and cooperative," says Violet P. Woodhouse, a certified family law specialist in Newport Beach, Calif. "If both partners are involved with the finances, make agreements concerning who will be responsible for gathering information for various items on the tax return. And if one is primarily responsible, agree on the days and times that person will work on the tax return alone and without interruption; it may be time to leave the residence with children in tow. It is very important that time spent on preparing for filing tax returns be quality, uninterrupted time."

If, however, preparing the actual income tax return is too overwhelming, Woodhouse suggests having it done professionally. But keep in mind, a "tax preparer or CPA does not gather information and documentation." That is still up to you.

"One small deduction doesn't account for much," Pollock says. "But a lot of small deductions adds up. Go through all of your receipts and leave nothing out, even the five-minute phone call you made from home for your business."

What You Could Be Missing
It's no secret that tax returns are hardly user friendly and can be overwhelmingly frustrating especially when you miss out on a deduction of which you weren't aware. "The one thing young families often overlook is the childcare credit," says Richard A. Mol窠a certified professional accountant in New York. "If you work and have childcare expenses for a child under 13, take advantage of the tax credit for child and dependent care. In addition, the credit may also be available for the cost of adult daycare for either an elderly parent you support or a spouse who cannot care for him or herself."

The typical expenses that qualify are payments to a daycare center, a "nanny" or nursery school, Mol石ays. Sleep-away camp does not qualify, but day camp does. Also, schooling costs for first grade and beyond count as education expenses and not a "care" expense, but "the rules on kindergarten are not clearly defined," he says. "Apparently, if the school offers a program similar to a nursery school (more 'care' than education), it can qualify." Mol矡lso says you must provide the name, address and social security number or federal identification number of the caregiver with your tax return in order to receive the credit.

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