Year-Round Planning

• Nothing is more stressful than waiting until the last minute to file your taxes. You can save yourself a lot of time and stress by making your tax planning a year-round endeavor. As you receive your bank statements, take a minute to look at the year-to-date interest received, then record that information on a spreadsheet. Do the same for your brokerage statements and the capital gains and dividend figures they show. By the time tax time rolls around, you will already have a good idea how much you earned in each of those categories. You can also compare your spreadsheet to the tax documents you receive to make sure you have all your paperwork before you file.
  
  

Categorize Your Documents

• As you receive each tax document, separate it into the appropriate category, then add it to the other documents you have already received for that category. That means keeping all of your 1099-INT forms from the bank in one pile, all the 1099-DIV forms you received from your brokerage and mutual fund holdings in another pile, and any W-2 wage statements in a third. Paper clip each of those documents together and keep them in an envelope or folder labeled "taxes."
  
  

Use Accounting Software

• You can use your accounting software to track your income and expenses throughout the year, then transfer that information to your favorite tax software to prepare your return. Enter each receipt as you receive it, including the name of the merchant, the amount of the purchase and notes on what that purchase was for. Then keep the original receipts in a safe place in case the IRS has questions down the road. When it comes time to do your taxes, you can simply import the information from the accounting software and use it to calculate your allowable business expenses.
  
  

Tax Preparation Software

• Tax preparation software can make all aspects of reporting and paying your taxes, from entering your income information to calculating your deductions, a lot easier. Enter your income from each of the categories listed, and the software automatically moves the figures to the right returns and schedules. Using tax software also greatly reduces the chance for mathematical errors, something that can slow your refund and the processing of your return.