Tax Preparation & Filing Made Simple

by Stacy Francis, CFP®, CDFA

Tax season is here! Time to panic over lost receipts, missing information on cost bases for stocks, and 1099s that won’t ever show up; or, time to spend an afternoon with your CPA; or, click a few buttons on your computer keyboard? It all depends on how organized you’ve been and how well you've prepared throughout the year, not just in April. Below are a few tips for how to reduce your tax-related paperwork, now and in the future.

Meet with a CPA This is by far the easiest way to take the tax filing burden off your shoulders. CPAs file people’s taxes for a living, so you can trust that they know all the tricks and traps. Save yourself time and hassle by asking friends, colleagues or family for a referral.

E-File If you do not wish to use an accountant, you can find a variety of simple and user-friendly e-filing programs online. Many of them are free, as long as your income is below certain limits. Save yourself some wrestling with your printer and a trip to the post office by filing online.

The Manila Folder Throughout the year, you will need to save documents such as receipts and transaction reports from your investment accounts. Whenever you receive one of these documents, stick it in a labeled manila folder. If you're paperless, create a folder on your computer for the same purpose.

Take Advantage of IRA Accounts Saving in IRA accounts will save you heaps of paperwork, as this eliminates the need to track cost basis and sales price for each security, and include these in your tax report. Once the money is in your traditional IRA or 401(k), it is off your tax record until you start to make withdrawals, at retirement. In case of a Roth IRA, you never have to worry about it again!

Take the Standard Deduction True, many people save a lot of money by itemizing . . . but it does require both time and effort. If your objective is to keep things simple, take the standard deduction. However, it is usually worth it to itemize. It could save you a lot of money.

Filing your taxes is never fun – unless, of course, you are expecting a huge refund! Use these tricks to simplify your tax filing process and minimize the time you need to spend in your home office, shuffling paperwork.

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Stacy Francis, CFP®, CDFA

Stacy Francis is the Founder, CEO and President of Francis Financial, Inc., a Wealth Management and Financial Planning firm. With over 18 years of experience in the financial industry, she is a CERTIFIED FINANCIAL PLANNER™ (CFP®), a Certified Divorce Financial Analyst™ (CDFA™), and a Certified Estate Planning Specialist (CES™). She is the Co-Director of the Association of Divorce Financial Planners’ (ADFP) Greater New York Metro Chapter and a member of the Women Presidents’ Organization (WPO) and an honoree member of the Private Risk Management Association (PRMA). A nationally recognized financial expert, Stacy has appeared on ABC News, CNBC, CNN, PBS Nightly Business Report, The Today Show, Good Morning America, Fine Living Network, and The O’Reilly Factor. Stacy attended the New York University Center for Finance, Law and Taxation.

Top 5 Tax Savers

by Stacy Francis, CFP®, CDFA

My friend, who would normally never talk to anyone about money, invited me over for dinner last weekend to discuss her financial situation. Her husband's salary dropped significantly and they're struggling to survive on her salary alone. They just crunched some numbers in their efiling software and learned that they owe the IRS almost $8,000. With no savings left except for the money stashed in their IRA accounts, how are they supposed to come up with the money?

Before you pull cash out of your IRAs or take out a loan, I told them, let me take a look at those numbers and see if I can shrink that tax bill. Many people pay more tax than they need to because the tax code is complicated and the thought of studying it in detail makes them queasy.

If you are one of these people, at least make sure you are aware of these top five tax savers.

  1. Investment losses. I expect this to be one of the biggest tax savers. If you sold these types of securities, you may be able to deduct the losses from your tax basis. You can offset capital gains against capital losses. If you still have losses left over (as many of us do) you can deduct up to $3,000 off your taxes each year until you have used the total loss.

  2. If you have an IRA, take your contributions to the limit. As long as you opened the account before the end of last year, you have until April 15 to add more money – and deduct it from your taxes if your income is low enough that you qualify to deduct your IRA contributions.

  3. Itemize. Most people use the standard deduction – to their loss! True, the paperwork involved in itemizing can be substantial. But many times your savings are, too.

  4. Skip your AMT. While difficult and best done by an accountant, in some cases you may be able to skip out on this tax (yes, legally) by taking smaller deductions in certain places.

  5. Save receipts for those charitable donations. Even my yoga studio has switched over to a donation-based not-for-profit. Keep track of your receipts and you can lower your tax basis.

Should you do your own taxes?

How much tax should you withhold?

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Stacy Francis, CFP®, CDFA

Stacy Francis is the Founder, CEO and President of Francis Financial, Inc., a Wealth Management and Financial Planning firm. With over 18 years of experience in the financial industry, she is a CERTIFIED FINANCIAL PLANNER™ (CFP®), a Certified Divorce Financial Analyst™ (CDFA™), and a Certified Estate Planning Specialist (CES™). She is the Co-Director of the Association of Divorce Financial Planners’ (ADFP) Greater New York Metro Chapter and a member of the Women Presidents’ Organization (WPO) and an honoree member of the Private Risk Management Association (PRMA). A nationally recognized financial expert, Stacy has appeared on ABC News, CNBC, CNN, PBS Nightly Business Report, The Today Show, Good Morning America, Fine Living Network, and The O’Reilly Factor. Stacy attended the New York University Center for Finance, Law and Taxation.