Get a Jump on Next Year's Taxes!

The taxman cometh, and cometh, and cometh . . .

Whether you're recovering from this year's bout with your return or still in the midst of it, it's never too early to make things less taxing for you in the future, starting with the return you file in 2011 for the current tax year.

On "The Early Show Saturday Edition", Redbook columnist Beth Kobliner, author, of "Get a Financial Life," shared tips for the tax -challenged that could help guarantee many happy returns:

Tip #1: GET ORGANIZED -- Use an Accordion File for Key Paper Receipts

Keeping your receipts organized will enable you to easily add up your expenses to see how much you can deduct come tax time next year. Use your credit card statements to help.

If you use paper receipts, try to organize them by expense type; you'll need to tally up the dollar amount in each expense category. (If you use your credit card statement, make multiple copies and circle the expense and file it in the respective folders.) That will save you time when you're filling out the tax forms (when you'll have to enter your expenses by type), and it will ensure that you've included every deductible dollar in your tallies.

Put your file in an easy-to-access place at home, and just pop your receipts in there as they're acquired. That means no scrambling through your wallet and envelopes scattered all over the house next year.

You don't provide receipts to the IRS when you file but you want to have them on hand in case you're audited.

Keeping Your Receipts

Use a Shoe box: If you're really lazy, at least use a shoebox, though it's time-consuming and expensive to sort through.

Better:

An Accordion file folder, tabbed by type of expense

Deductible Expenses:

It's very tricky and you have do your own research. Use the Internal Revenue Service Web site. The IRS describes legitimate business expense as something that is "ordinary and necessary" for your business. If your employer reimburses you, it is not a deduction. Deductible expenses can include travel for work that you wouldn't have normally taken, sbscriptions to trade publications, union dues, a tuxedo if you need it for your business (one accountant I spoke with said if you're a band leader and you need a tux or you're required to go to black tie benefits, but you wear it to your sister's wedding once, it's still deductible)

Expenses that aren;t deductible: A suit or dress you're going to wear to work; your briefcase; meals; commuting expenses. The point being: You'd have to feed and clothe yourself and get to and from work, no matter what. And that Tuxedo you wear to company holiday party because you choose to? Not deductible

Tip #2: E-FILE: The Software is Deductible and Helps You Organize

There are so many people who are tech-phobic. If you're one of them, make 2010 your year to get over it. It's common to pay hundreds of dollars to a tax adviser. Many people tell me how surprised they are to learn how programs like Turbotax, Tax Act and H&R Block at home offer prompts such as, 'Do you have kids? Are you self employed?' Etc. And that makes it easy to get deductions and credits you qualify for.

Big benefits:

You get your refund in half the time if you file online. If you ask the IRS to direct-deposit your refund (an option available with e-filing or paper filing), you'll get your refund at least one week faster. The software is tax deductible when you itemize. You can even import data from Quicken directly into TurboTax, for example.

Tip #3 PART-TIMERS AND FREELANCERS: CONSIDER USING AN ACCOUNTANT; You're at Higher Risk for Audit

With the unemployment rate continuing to hover just below 10 percent, many people are trying to make a go of working for themselves, full- or part-time. Most part-time and freelance workers file as "sole proprietors" of their business, which requires attaching a "Schedule C" form to their 1040.

Since your taxes are more complicated than the average, it may be a good investment to hire an accountant. They can often save you more than you make! Look for one who specializes in freelancer issues.

Be aware that the IRS tends to audit self-employed workers more frequently, so you'll want to back up your expenses.

Self-employed people often have to pay estimated taxes every quarter

Take advantage of the home office deduction, but be careful; it's tricky! You may be able to deduct a portion of rent, utilities, insurance, etc. but it's still very tough. It must be used exclusively and regularly for business and has to be your primary place of business or a separate structure not attached to your home. One example: You may be able to deduct a particularly percentage of your rent, etc. based on the square footage of your home that qualifies as an office.

If you sit on your bed with your laptop, don't think it's easy to claim your bedroom as a home office!

Other possible deductions: meals or drinks for clients, travel expenses, and health care premiums.

Segregate business expenses from personal expenses. Have separate credit cards and bank accounts. This will help with deductions. Start tracking purchases with Mint.com. Consider also maintaining a separate phone line.

Tip #4 REWORK YOUR W-4: Adjust Your Withholding, Depending on Your 2009 Refund

It's feels great when you get a refund check. The average refund has been $2,978 this year so far. But the fact is, a refund just means the IRS was holding onto your money while you could have had it and been earning interest on it. You're better off getting a much smaller refund and having had the money throughout the year. (You could have either paid off high-rate credit card debt or put it into a 401k with matching employer contributions or stashed into an emergency savings cushion that earned you interest.)

Increase the number of withholding allowances you claim, usually by 1 or 2 (don't claim more than you deserve; if you pay less than 90% of the tax you really owe, you might be hit with a penalty and interest)

To make the change, file a new W-4 form with your employer

Tip #5 DON'T FORGET 2009 FEDERAL TAX CREDITS; Several Carry Over to 2010

Energy-Saving Improvements: You'll get a 30 percent credit (capped at $1,500) for the cost of many energy-saving improvements you make on your home this year (but it's but slated to go down to 10 percent (capped at $500, in 2011). Such items include: insulation and air-sealing products, energy-efficient windows, heat pump water heaters.

School Tax Credits: If you're still thinking about going back to school either full- or half-time, 2010 is the year to do it, tax-wise:

The American Opportunity Credit, an education credit worth up to $2,500 per college student, expires at the end of 2010. You can qualify for the full credit for families with joint returns earning under $160,000. You need to be enrolled at least half-time for one academic period to claim this.