Como estas ustedes taxpayers? This is the time of year when all Americans begin to prepare for the semi-religious ritual of filing their tax returns. The date of April 15th really does seem to have a religious connotation, sort of like the Jebrews Day of Atonement. So, this seems like a good time to pass some tips your way to help y'all organize your data.
There are many acceptable methods to retain and organize tax materials. Personally, I keep my tax records in a filing cabinet, under shit. The most important thing to be aware of it what to save and how to organize. The following is an example of basic categories:
Reporting Data: This consists of little pieces of paper, very easy to misplace and lose, on which are reported items of income and deductions. Fortunately, they all come at the same time of year -- like now. So keep an envelope or empty tortilla bag handy. We're talking about information items such as: W-2's, mortgage statements, loan interest advices, 1099 forms, etc.. Remember, just because you don't receive a 1099 from a free-lance production client, this does not relieve you of the obligation of reporting the income!
Cancelled Checks: These should be sorted into categories, basic stuff like auto expenses, job supplies, dues and publications (like R.A.P.), contributions, etc.. Whenever possible, try to match up checks for business expenses with the related receipts. For instance, a check to an appliance store for a CD player is not qualified evidence. They also sell microwaves and Nintendo.
Credit Cards: When you use that plastic, they give you a stupid little piece of tissue paper that is practically impossible to keep from disappearing. The fact that they are useful for other purposes doesn't help either. For instance, on occasion, and in a pinch, I have twisted up a Florida Bomber with them...once or twice. But fortunately, every month they send you a recap of your monthly charges and account activity. Never trash those! The monthly credit card summaries represent a nice, little, chronological recap of expenses.
Business Diary: Anyone who has client contact and uses their ride in business should be keeping a diary. Unlike your amigo Raoul, who for most of his adult life has been trying to cover his tracks, you should be leaving tracks of your business activities. Not only is a diary required by the federales in an audit, but it can be an excellent business aid. Your diary should be a record of what you did, where you went, who you saw, and how many pesos you spent. It should contain your beginning and end-of-year odometer readings for the vehicle you use in business (which is important when calculating business use percentage of auto expenses). If you haven't been keeping one, start now. Raoul says, "You'll be glad you did."
To summarize, when you are finished assembling all this crap and are reviewing it, you should have a pretty good idea of what your year was all about, which is exactly what your tax return is supposed to be: A summary of your financial year. Good preparation is the key to helping you re-familiarize yourself with the previous year and filling in the blanks. This process honestly can be boring and tedious, so to spice it up I suggest you spread all this junk out on the floor, get a bottle of tequila (or whatever dulls your per-sonal pain), your spouse or significant other, and get naked...but start early! Good luck!
Well, Raoul promised, so here it is: RAOUL'S TAX TIP OF THE DECADE
Directly from the Research Institute of America, Inc., Complete Analysis of the 1986 Tax Reform Act (El Stinko Grande):
1986 Act: Code Section 1709(a): The 1986 Act exempts income derived directly from the sale of reindeer and reindeer products from federal income tax.
Do you love it? And they said there were no more loopholes! So, if you have a nice size yard and can stand the smell, go for it!