Hey, I didn’t say I’d eliminate your headache. Taxes are still a pain in the you-know-what. But over the years, I’ve learned that a couple of key measures we take personally really help when it comes to tax time.

My guess is 75% of you will file sometime in the next 20-30 days. The other 25% will either procrastinate until April 14th (hey, I was in that boat once, too!) or have braved it and filed pretty early.

With tax season in full swing, let me give you my “Top 4″ tips for 2010:

Pre-File Early

What is pre-filing? No, it’s not something you can do with the IRS. It’s what I do with my online e-Filer as soon as I get my W-2′s in the mail. This tells me, very roughly but very quickly (5 minutes or less), whether I am likely to owe money or get money this year.

Why is this important? Well, if you owe money, you’ll probably want to wait as long as possible to file taxes (or file, then pay before April 15th). You’ll also want the heads-up in case you need to come up with the cash.

On the other hand, if you are getting a refund, you’ll probably want to file as soon as possible. You’ll also want to start thinking about how you’ll use it so it’s not a complete surprise and waste when the check comes in.

Either way, you’re also able to modify your W-4′s one to three months earlier based on “feedback” (refund/payment) from last year. That will make next year’s taxes more to your liking!

Even if you normally do your taxes with an accountant or brick-and-mortar service, you can still start a return with a service like Turbo Tax Online, and preview your payment/refund for free.

Try it this year! Even if it’s a little late, as soon as you get the “bulk” of your income and deduction documents, get them into a tax system. Get an idea of where you stand, even if further income or deductions are on their way. If your taxes are similar year-to-year, you should get a “feel” for what else is coming and whether it’ll affect you in a good or bad way.

Get Organized

Yeah, no kidding. Well, why is it so hard for people to do, then?

Keep a catch-all folder on your computer and your desk for all tax documents coming in. That’s because some things now come in online, and some still get sent by snail mail!

If you do get something by email (usually it’s a notification, not the actual document), go to the website and pull your documents immediately (or you will forget!). Then save it in your computer folder for later.

When it’s time to do taxes, pull out both folders and cross-check your master account list (all of your known accounts and income sources) with what you’ve received. Is anything missing? (Believe it or not, I have had W-2′s go missing on more than one occasion!).

Stay Updated

Being “in the know” on the latest tax code changes is important. And I don’t mean every single line of new law–but the major changes that happen each year.

One example was the home buyer credit that everyone talked about this year. Did you know debt forgiveness through foreclosure is now not considered income if certain conditions are met? How about the latest deductions for energy-efficient cars?

Being informed throughout the year helps you make better choices with your entire financial picture in mind.

Stick With One System

We’ve used Turbo Tax Online for as long as I can remember (eh…about 5 years). Staying with one tax provider is awesome, because last year’s information is automatically imported, so I don’t have to repeat myself (and it helps to cross-check the numbers!).

I’m familiar with the system and know how to navigate it to get the answers I want quickly (see pre-filing above).

Look for discounts through your bank or brokerage–both usually offer me some sort of % off the retail price on Turbo Tax, and I take full advantage.

What’s Your Favorite Tax Tip?

Well, there you have it–my top 4 tips for this tax season. How about you?

What is your #1 tax tip for your fellow Fiscal Fizzle readers? I can’t wait to hear it!

Photo by alancleaver_2000

Well, it’s official–we have a date. Friday is the day my son will greet the light of the world and join us in this crazy thing called life.

As you can imagine, things will be quiet for me on my social outlets–Twitter and Tumblr primarily, for at least a few days, as we get settled in to the new lifestyle.

First and foremost, thank you for the outpouring of support I’ve already received via email, tweets, and comments, and those that I’m sure will continue coming in over the course of the next few weeks. It’s great to have such a large community to cheer us on and provide support in terms of ideas and suggestions.

Since we’re talking about babies today, I thought I’d tackle an important topic that only crossed my mind a few weeks ago–financial “checklist” items after the birth of your baby.

We get so wrapped up in the excitement (I know I did) of waiting for the baby that some of these can quickly slip through the cracks and cost us a lot of lost money. I’ve put together a quick list of 6 that we’ll be doing soon after birth, but if you can think of more, by all means–please chime in below.

1. Adjust W-4. This is something I did as soon as the year turned the corner, and should see significantly less taxes coming out of my paychecks starting next week. Consult with your tax professional, but my understanding is that even if you plan to deliver in late December, you can still claim the new baby for the whole year. (Ours, of course, decided to wait until early January).
2. Open a college savings account. We’re not going to wait very long after birth to get the little guy started on his way to college. Time is on our side, and the more we can contribute early on, the easier things will get as the years go by.
3. Call the car insurance company. Heck yeah! Having a baby is probably as good as getting married in terms of lowering your car insurance premium. How good is yet to be determined, but as soon as the little one is out, you can be sure we’ll be making the call to find out.
4. Add the baby to health insurance. Most insurance companies will cover costs associated with your baby (not your birth), as long as you add the baby under your existing policy within 30 days of birth. This can range from routine care to more serious stuff like NICU.
5. Quote life insurance. It’s crazy to think about it, but now you’re responsible for someone else’s life–someone who can’t take care of themselves if something were to happen to you. That’s a lot of responsibility, and it means you should make arrangements in case disaster strikes.
6. Modify legal documents. There’s a whole list of possible places your baby would need to end up in writing, but some obvious examples include any account beneficiaries, wills & testaments, or any other insurance company that would need to know about your kids.

Have I missed anything? Do you have suggestions on any of these items from personal experience? I’d love to hear your stories.

Photo by gabi_menashe

Today, I’d like to introduce my readers to a wonderful resource I found a few weeks ago that can tell you exactly where your tax money is going. Produced by Jess Backman at WallStats.com, this 6-square-foot poster of goodness describes, in painstakingly articulate detail, each branch and department of government and how much of the budget it consumes.It has sold over 5,000 copies to date.

I have never before seen a “mind map” style chart so well done. The “Death and Taxes” poster was created in 2004 and caught on in popularity about 2 years later. The poster has been updated every year with additional departments, newer graphics, and more accurate information. From WallStats’ about page:

“It took me a few years to understand the complexity, redundancy, and general obfuscation the government uses in the budget process, then I had to make sense of it all to the viewer.”

WallStats.com is the result of a migration to a new webpage for the 2009 version. You can view the entire poster with zoom level details on the site, and purchase the printed copy for $24. I’d love to have this sucker hanging on my wall. Let me know what you think!

I finally got around to completing my taxes for 2008 today (thanks to the craziness of moving a few weeks ago, and not being able to figure out if I had accounted for all my information in the process). The middle of March is pretty late for tax filing for me, as I usually try to get everything in by the last few weeks of February.

Here are a few things I’ve learned this year that I hope to apply toward making life easier next year:

1. Marriage affects taxes. Usually not in a bad way, but I was “stalled” in my pursuit of the $0 refund. If you plan on getting married this year, evaluate how it will affect your taxes now and adjust things accordingly.
2. Beware the free e-file. I started out with my TurboTax software in “free” mode, but ended up having to upgrade because I had investment income that required the $14.95 version to work. I wasn’t terribly upset, because I half expected it, and because I’ve respected and used TurboTax for the last 5 years. However, if you’re really shooting for free e-filing, be sure to read about what’s included before you commit to a service and realize you may have to pay.
3. Save your work. After three hours of working on my taxes this morning, I was ready to file, when TurboTax suddenly said…Bzzzt! I had to restart everything, but thankfully the online program backs things up after every click. If you’re using home software or another online service, make sure they do the same, or save manually and often as you work.
4. Detailed accounting saves detailed searching. Track tax-related income and expenses all year long with tax season in mind. This takes a little pre-planning to know exactly what would be considered taxable income and deductible expenses. Make sure you know in January what to look out for and discuss things with everyone else in your family, so that receipts don’t disappear.
5. Not everyone is on top of things. Don’t expect to get tax paperwork from everyone you dealt with. In years past, there have been W-2 forms that never made it to my mailbox, and this year, I didn’t receive several interest statements from a few of my accounts. While it’s true that there are established thresholds for when a financial institution has to send you something (for example, I believe for interest paid, that’s $10), don’t assume that you can overlook the income if you didn’t get anything.
6. Simplify your account structure. One of the main reasons I had so much legwork involved in preparing for my taxes this year was the web of accounts I’ve woven over the last several years. Many of these are inactive and serve no purpose besides…well, nothing really. I intend to close them and get rid of the headache involved in tracking mounds of paperwork.
7. Business taxes are scary. Well, probably not as scary as I think. I didn’t have to file any business income this year, but I was curious and did take a peek. With the establishment of several blogs planned for 2009, business taxes are not something I am looking forward to. Hiring an accountant will be a serious consideration as things begin to pick up, especially if I decide to protect things under an LLC.

What did you learn this year about tax preparation?

Tax season is here, and my employer’s W-2s faithfully arrived in the mail a few days ago. Curious to see how accurate my estimates throughout the year had been about my taxes, I logged in to my TurboTax account, and punched in the information. I quickly discovered that I would once again be getting a nice check from Uncle Sam come April, and was deeply disappointed.

Am I crazy? Nope, because tax refunds are bad!

If you do think I’m crazy, consider a few things first. There are certainly a lot of positive things to be said for tax refunds. In hard economic times like these, it might feel like a much-needed bonus for many people. Since many also don’t expect it, it will allow them to take vacations with their family, buy a new car, or shop for electronics. After all, it’s free money, right?

If you stop to actually think about what’s happening, it doesn’t take long to realize where the money is coming from. It’s yours! Would you go out and blow through the money if it was coming in your paycheck instead? The average tax refund in 2008 was almost $2,500. Assuming you get paid every other week, that’s almost $100 missing from every paycheck! If you are truly struggling, wouldn’t you rather have an extra $100 every other week, rather than getting a big chunk at the end of the year and spending it foolishly?

If you are still skeptical, consider the following two scenarios:

Large Tax Refund: You get a big tax refund in April 2009 ($2,500) and another in April 2010 ($2,500). You invest the first year it in a bond fund that returns 5% per year. How much will you have in April 2010? Including compound interest, about $5,127.

No Tax Refund: Instead of the big chunk at the end of both years, you get and save an extra $100 each paycheck in the same bond fund, returning 5% per year. How much will you have in two years (April 2010)? (Remember, we started saving in April 2008, because we didn’t have to wait for a refund to come). Again, including compound interest, about $5,246.

Granted, $119 may not seem like a large amount. But what if you’re dealing with much larger refunds than the average? Also consider the effect of doing this every single year for the rest of your life. And then add the magic of compound interest on the entire balance. Now we’re talking!

Most importantly, consider what you actually do with your tax refund every year. If you’re like many Americans, it’s very likely that the money is gone before April even comes to a close, and you are left wondering how this large windfall you received disappeared so quickly. If you have the discipline to save the money every month, you will be better off in the end without giving a free loan to the government.

How do you go about figuring out what you should pay? If you are already using software like Quicken or Microsoft Money, both have built-in tax estimators that can help you figure out how close you will be to breaking even at the end of the year.

They work so well, in fact, that on last year’s taxes, I owed a total of $22 to the government. The fact that I owed money is irrelevant – what’s important is how close I came to accurately estimating my tax liability for the year. Getting married this year threw off my estimates, but thankfully did so in the positive direction. For 2009, I will be running the same simulations and targeting $0.

If are looking for an online solution, a great tool put out by the IRS is the Withholding Calculator. Inputting your expected income and deductions will return the number of allowances you should take on your W-4 form to achieve the smallest possible refund. Once you have an idea of where you stand, go to your employer, and ask to modify your W-4.

Don’t give Uncle Sam a free loan and keep the money you’re working for instead. If you think a big “bonus” is a psychological boost, just wait until the “raise” you get when you fix your taxes.

Photo by alancleaver_2000