December is a great time to gather your financial information and prepare for tax-return season. Before placing all of your 2010 paperwork in a box and storing in the basement, consider pulling out some key items. This will save you time and help you avoid stress when that April deadline approaches. The following are just a few items that you may need come tax time.
Settlement Statement -
If you bought or sold a home during 2010, you will need a copy of your settlement statement detailing the closing costs. Some of these items may be tax deductible.- Property Deed -
If you purchased your home and qualified for the first time buyer tax credit, you may be asked for a copy of the deed to verify the date on which you purchased the property. - Property Tax Bills -
Do not rely on your mortgage statement to accurately reflect the taxes paid for 2010, especially if you purchased your home mid-year. A copy of the tax bills and of your settlement statement (if any taxes were paid at closing) will ensure that you have the correct amount of taxes actually paid for the year. - Receipts -
Look through your receipts and keep copies of anything that may be used for your taxes. Consult with your accountant for guidance. Usable receipts may include home repair expenses and child care expenses. Receipts commonly fade over time, so it is a good idea to copy or scan your receipts to ensure that they are legible should you get audited. - Utility Bills -
This applies again to investment properties. Keep copies of any common utilities such as water/sewer.
If you are not sure what you may need for your taxes, organize your paperwork into different categories ahead of time. If you find out that you can not use a particular category for tax purposes, you can simply ignore that set rather than searching through your entire stack of paperwork again.
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