Gathering the Documents You Need to Prepare Your Taxes

Before you can start working on your tax return, you'll need to gather up your tax documents. For many of us, that means Form W-2 which reports our wages and tax withholdings. You may also need information from various 1099 forms that report bank interest, dividends, or other types of income.

Keeping all your tax documents in one location will be handy. I usually place all these documents into a single folder as they arrive in the mail. But you'll also want to know if you have everything you need. And here I suggest making a checklist. Get a piece of paper, and fold it into three columns. In one column jot down all the types of income you have: wages, dividends, interest, and so forth. In the second column, jot down all the tax deductions you might have: charity, mortgage interest, college tuition, moving expenses, and so forth. And in the third column write down various tax payments you've made. This would including federal withholding from your paystubs, state tax withholding, and any estimated payments you've made.

Once you got your checklists, you will then want to start finding the documents that you need. You might be able to summarize your expenses using a report in your finance software. Once you know what you're looking for, when you come across that tax document or receipt, you'll put in it the folder and check that item off your list. Spent $1,500 on college tuition last year, for example? Find that tuition receipt or print a new one from your college's Web site, and put it in your deductions folder.

This year, you'll also need to know how much money the IRS sent you last year as part of the economic stimulus rebate in order for you to calculate this year's recovery rebate credit. If you don't remember how much you received, you can find out quickly using the How Much Was My 2008 Stimulus Payment? applet on the IRS Web site.

If you are using financial software, make sure all your entries are finished for last year. Many personal finance programs have a tax summary report you can run that will show various types of income, withholdings, and how much you spent on tax-deductible expenses. Print this out, and use the report as a guide for finding the documents or statements you need.

As a bonus, if you create this kind of checklist now, at the beginning of the year, you'll know exactly what documents you have received, and which you are still looking. But these reports and the supporting documentation in a folder. And check off the report items as you get the documents. That way you'll know when you're ready to start preparing your return.

More information:

• Using the Tax Schedule Report in Intuit's Quicken (About Financial Software)
• Using the Tax Line Manager in Microsoft Money (About Financial Software)
• Recordkeeping for Individuals (Publication 552 from IRS.gov)