Your Best New Year’s Tax Resolution?

January 14, 2010

That’s easy.  In fact, I can put it into four simple words:  Don’t put things off.

In staying on top of your finances, procrastination is always your biggest enemy, especially where tax planning is concerned. And now that a new tax season is on the horizon, there’s never been a better time to make certain that you’re tracking all of your expenses—especially those that could add up to big savings on your tax return.

Want a better return come April 15th?  Here’s my checklist of the top three expenses most people overlook at tax time:

Medical Expenses. And I’m not just talking about actual expenses.  Any incidentals, such as mileage back and forth to a doctor’s office, should also be added in.

Investment Activity. Make sure you keep an accurate cost basis on your stocks and bonds to track your gains and losses.  This is important especially if you switch brokers.  Your old broker may not forward the cost basis of your portfolio to your new financial advisor unless you specifically request it.

Charitable Donations. Keep solid, complete documentation on all of your donations over the last calendar year. For example, new IRS regulations require that you should receive acknowledgement letters from organizations that have received a donation from you.

Finally, make absolutely sure that you stay on top of recording all of your income over the year, even if it’s the smallest amount, like bank interest.  Not doing so on your return automatically will kick back a notice from the IRS.

So be proactive, keep good records, and you just may be looking at a better tax picture in 2010.

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