Groundhog Day passed uneventfully at the Funny Money house, where we do, indeed, have our very own groundhog, despite several visits from the local trapping service to drag the critter out from under our deck before his tunneling damages the foundation.
After all that, the least the ungrateful varmint owes me is to pop up and give a weather forecast although, if heíd predicted six more weeks of this winter, Iíd find my recipe for Groundhog Fricassee.
The six more weeks of bitter cold predicted by other groundhogs coincide with what remains of tax-filing season, and thatís where my groundhog is smarter than me: while Iím wresting with IRS Form 1040, heíll go back to his soothing winter snooze.
I need some paper cuts
Thatís too bad, because I could use his help burrowing through the mountain of receipts, statements and charge slips I dig through to figure out what I owe Uncle Sam. Fortunately, Karen Newman, assistant director of tax services at the Accounting Aid Society in Detroit, says I can skip a lot of that hassle, unless a specific piece of paper is needed to back up a claimed deduction.
ďOnce you find out that you canít put this on your tax return, it can go,Ē Newman says.
For example: Do you file your return using Form 1040A or Form 1040-EZ? Then you donít need anything but your W2 wage statements, because you donít itemize deductions on those forms. And if you claim the standard deduction on the regular 1040, youíre not itemizing either.
Another way to cut the paper chase at tax time is to save only year-end statements on things like retirement accounts or mortgage statements. The year-end statement will list all your mortgage interest and, if you escrow your real estate, all taxes paid. On a retirement account, itíll show all your contributions or distributions. You still can keep the monthly statements, just donít haul them all out for tax calculations.
Unstuff that shoebox
Winnowing the paper pile can also save you money if you have your return professionally prepared, notes Mark Luscombe, the principal federal tax analyst at CCH Tax & Accounting North America.
ďA lot of people just put all their receipts into a shoebox and donít differentiate between them at all,Ē Luscombe says. ďIt saves you a little money to have this organized so you arenít going into your tax expert and dumping a pile of receipts in front of him.Ē
Paperwork that filers often donít hang onto but should includes receipts for educational expenses, so definitely keep Form 1098T if you want to deduct higher education expenses. And you need detailed proof for charitable deductions, too ó you canít just claim that your old shirts were worth $500 each. (Also, moldy doesnít equal ďvintage.Ē)
Cutting down on the endless wad of papers needed for a tax return should speed things up, a welcome development since, according to the IRS, Americans spend an average 13 hours preparing our returns. And once my 1040 is done, Iíll need one more favor from my groundhog: burrowing through the snow so I can get to the mailbox.
ďThe $1,000 Challenge: How One Family Slashed Its Budget Without Moving Under a Bridge or Living on Government CheeseĒ is Brian OíConnorís humorous guide to budget-cutting. Now available at www.bit.ly/1000orders