(ARA) - The sooner you get your money back from the IRS, the better, so start now. Get your taxes done faster and more accurately with these seven strategies from Jeff Schnepper, author of the best-selling "How to Pay Zero Taxes" and a tax expert for MSN Money.
1. Get started
The first step is the hardest. Stop thinking about it and get moving. Until you actually start your return, you'll never get to finish it.
If you don't have all your numbers, just put your name and address on the form. It will get you in the mindset to move forward. Your first step is to break the inertia.
2. Accumulate the data
By the end of January, make sure you've gotten W-2s and any statements from your brokers and banks. You'll receive 1099 Forms for any interest, dividends, and sales of stock. Your mortgage company will send you a Form 1098 for any interest and real-estate taxes paid. Get those statements together and review the numbers. They're not always right.
3. Put the numbers in IRS categories
Neither the IRS nor your CPA is going to add up those numbers for you.
You're going to want to have totals for the income and deduction categories the IRS provides. You'll need that final "number" if you're doing your own return, whether by hand or by computer. If you're having your return prepared, you'll want to give that number to your CPA to minimize his or her bill.
A good way to get organized is to use the "envelope" system. Create an envelope for each of the IRS income/deduction categories. There'll be an envelope for medical expenses, charitable contributions, job expenses, interest paid, etc. Find all the receipts, all the checks, all the invoices and put them in the appropriate envelope.
You can use this simple system all year. Throw all of your receipts into a file or even a shoebox. When you reconcile your checking account, on a monthly or at least a quarterly basis, you break down the checks and receipts according to the categories you selected.
By the end of January, you should have had all your checks and receipts broken down in each envelope by deduction category. You add up the receipts and checks (don't double count!), and that's the number you use on your return or give to your preparer.
That's how much you've spent in each deduction category. And, with this system, you never have to fear an audit.
An audit is nothing more than the IRS asking you to prove the numbers you put on your return. You've already done that. Just hand over the deduction-category envelope with the receipts and checks. After a series of matches, it's going to be a quick audit.
4. Analyze the numbers
Sometimes, the raw data you have is going to be wrong.
On the income side, you're required to report any and all interest and dividends received, even if you don't receive a Form 1099.
You'll have to match up the sales of stock with the cost of those shares. The number shown by your broker on Form 1099 B is only the sale price. You're not taxed on 100 percent of that number. You reduce it, on Schedule D of your return, by your cost, including broker's fees. You're only taxed on the net profit. (To automatically generate a Schedule D based on your investments, visit MSN Money at money.msn.com and check out the GainsKeeper service).
If you don't sell 100 percent of your position, you'll have to allocate your costs on a per-share basis.
On the deduction side, you may have deductions not reflected by the raw data. Say you made your Jan.1, 2004, mortgage payment on Dec. 31, 2003. The interest you paid won't be reflected on the Form 1098 sent by your mortgage company. That's because they didn't get the check until 2004.
But it's a 2003 deduction, and you should run an amortization schedule to compute the additional interest. That additional interest would be shown on line 11 of your Schedule A.
5. Call your accountant
If you're going to have your return professionally prepared, call your accountant now for an appointment.
Just make sure you've got the numbers in order when you show up. Your wallet will appreciate it.
6. Put ink to paper
Or, at least open the tax program on your computer. You've got your numbers. If you're doing your own return, put ink to paper. Go to your quiet place and actually do your return.
You've done the real work. Now you're just putting numbers in boxes. Relax; this is really the easy part.
7. Mail your return
A completed return on your desk that calls for a refund is the IRS's idea of heaven. It's your money. Don't leave it with the IRS. It's bad enough that they've held it all year without paying you any interest on your excess payment. Don't compound the pain by delaying the mailing.
Of course, the best way to speed up your return is to e-file -- available at Web sites such as MSN Money. The IRS appreciates the cost savings and claims it expedites your refund.
Electing a direct deposit of your refund will always get it into your hands faster than snail mail. More than 41 million taxpayers used direct deposit for their 2002 refunds, up from 39 million a year earlier.
Complete lines 70(b), (c), and (d) of your Form 1040, and, coupled with an e-filed return, in theory you could have your refund in your bank account in as little as 24 hours.
Alternately, the IRS now has a new refund assistance line, (800) 829-1954. It also has a new Web tool called "Where's My Refund?" that can tell you whether the IRS received your return and whether your refund was processed and sent to you.
For more of Schnepper's tax tips and access to preparation and filing tools, visit www.money.msn.com.
