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Disorganization Costs You Money - YouTube
Channel: TaxGuide101
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hi everyone this is aki with another
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tags video going over five tax mistakes
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that are costing you money for if you're
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being bit disorganized
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if you're missing documents and receipts
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guess what you're also leaving some
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money on a table because either your
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refund is going to be reduced or your
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tax liability is higher so number one
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thing that you have a control of is if
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you're not keeping copy of your prior
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tax return that
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it's impacting your tax bottom line why
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you need your prior taxes
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if you're filing using a tax
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software on 1040 many times um different
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tax software will ask you for your
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adjusted gross income and that's taken
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from your prior year tax return now some
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people think oh it's just my wages so i
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remember you know my what my wages were
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and it might be the case but for many
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people you see all these adjustments are
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being done to your income like there's
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other maybe tax taxable interest maybe
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you had some dividends or whatever
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and so that's calculated the adjusted
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gross income is not necessarily your
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wages only so if you
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keep inputting the income incorrect
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adjusted gross income into tax software
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and it keeps getting rejected at some
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point the tax software the irs database
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is saying okay this is suspicious
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activity guess what you will have to
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file by paper which is a hassle if that
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happens don't worry about it just make
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sure you keep a copy for next year but
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another reason why you want to keep a
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copy of your prior year tax return
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is also because
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you want to reference it and you want to
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see maybe there's some credits or
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deduction that you're getting from year
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to year and you want to make sure that
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you're not forgetting something so this
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just really helps you trigger your
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memory to realize that wait a minute i
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had some credits last year um
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why am i not getting it this year so
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it's like a good reference and um
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that's really helpful um number two
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is filing tax returns with missing
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documents so if you're missing w2 or
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1099 rs 1099 b's and so on any kind of
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1099 forms
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maybe you had a job for two weeks and
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you forgot like that you even had that
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job if you're not going to include it on
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your return guess what irs is getting
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copy of all the forms that you're
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getting copy of and they will know that
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something is missing and you might get a
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letter with either examination or
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they're asking for more documents or
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they're evaluating or making adjustment
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to your bottom line
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and you know sometimes people are
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rushing through their tax process and
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they're thinking oh i'm just i just want
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to file it right now because i know i
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have refund coming but you're missing a
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broker statement and maybe you had some
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capital gains dividends or there was
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some selling going on that some people
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don't even realize sometimes taxpayers
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you know have a relationship with the
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brokers and for whatever um you know the
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way they have it set up is that the
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broker can set make some selling of
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certain you know mutual funds or stocks
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at some points if it reaches certain
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levels and they didn't realize that they
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had a sell of their
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stocks during the year and they had some
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capital gains so
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you know if something is missing then
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basically irs will make that adjustment
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and you might have a you know a surprise
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that's not a positive not a good
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surprise that you thought a refund was
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coming but then you actually
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um have to give some money back and no
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one likes that and then you might have
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penalties and interest i'm not paying
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everything on your tax returns if you
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have tax liability let's say so you know
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so it's very important now let's say if
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you do have documents missing and you
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know that something is missing but you
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don't you can't find it so you can get a
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record you can get a transcript so if
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you go to irs and i'll put it in the
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show notes um
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basically you can request it online you
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can get the transcript so if you have
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tried to get a w-2 let's say from your
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prior employer
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and they're not being responsive maybe
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they went under what have you you can
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try to get it from the irs um and
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there's an easy process there's also a
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get transcript by mail if you want to
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just do that so i'll
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include this link so you are
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able to obtain that information
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number three
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um is not keeping receipts that support
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credits and deductions so if you know if
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you have a child and you
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you know after school that you in enroll
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them in after school program because you
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know you can't pick them up on time or
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um you know they were in daycare and
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what have you then you know you can get
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some credits for that and if you don't
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have the information like filled out
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from the provider of these services then
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you're leaving a lot of money on a table
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and you're not going to get these
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credits and deductions and so
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you have to
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try to obtain that information as soon
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as you can
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uh for the year so when the year ends
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just make sure you go back and you try
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to get that information
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another you know maybe deduction maybe
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you contributed to an ira but you don't
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remember what it is and you're guessing
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or you're saying oh i don't know it
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wasn't much but it was maybe a thousand
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dollars that you can be deduct from your
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taxes so
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um you know it's very important to have
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that information
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um
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fourth one is not retaining historical
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cost basis information uh an investment
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what does that mean it means how much
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you paid for your investment so let's
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say if you have stocks that you bought
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at hundred dollars let's say and then
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you're selling it now but it was a long
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time ago that you that you bought it and
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now you're selling it for 200 if you
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don't have the cost basis information if
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you can't find the paperwork then you're
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just saying oh you know tax me on the
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entire 200
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per share which is a lot of money that
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you're going to pay taxes on versus if
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you can subtract the cost basis how much
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you paid for the you know investment
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then you can subtract it from what
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you're getting so you're only paying you
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know taxes on the hundred dollars so
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sometimes you know on stocks you can't
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find any information so i'll show you um
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a way that you can get some historical
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information and i like the yahoo finance
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actually for historical information the
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best i'll put the link for you as well
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and basically you're just searching for
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your stock
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and then you can click on historical
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data
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and once you have that you can also get
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it monthly
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and you can specify how many years you
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know you can do five years or or max or
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what have you and then apply and then
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you can have um
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historical information and if you have
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an idea when you bought it maybe a year
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at least then you can use this as a
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averaging method of finding you know the
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cost of your stocks and so this is a
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good reference it's not
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um
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it's not hundred percent especially if
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there's some stocks that went through
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you know splits and so on but it gives
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you an idea of what it was if you had
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zero
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um historical information now you know
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you you bought a property if you buy a
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property you should keep the document
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these documents until you actually sell
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it because the same thing maybe you have
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an investment property and you made some
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improvements changes so these are costs
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that you can subtract from
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your um
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proceeds so if you sold it for so much
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more now than what you bought it
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originally but you made some
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improvements you have to have the
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documents because if you keep guessing
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guess what if the irs asks you to
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support your
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um calculations and if you don't have
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that then you will lose with the
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with the agency so it's very important
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to have that and keep it until you
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sold your property
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or you know the
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stocks or mutual funds and so on
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investments now final the last one is
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not including power of attorney
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if you're filing documents for deceased
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let's say
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um that's very important because um you
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have to have it in order to file the tax
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return for someone else and on the irs
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website
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they have some information what you need
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there's a you can pull the power of
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attorney
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form and fill it out and actually you
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can send it
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um you know send it to the irs
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and there's different ways you can
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submit it online you can just mail it or
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fax it so it's very important to have
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that
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um and they also have this irs
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assistant that you can answer some
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question to tell you it will tell you
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you know how to file the the um tax
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return for a deceased person
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so that could be helpful
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so if you don't include that form what
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will happen either the you know the
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processing can be delayed
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the refund can be delayed now there's
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also other processes that you have to
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and steps you have to do if in case
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there is a refund on a dc's form there's
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a form 1310 that you have to fill out in
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order to claim a refund do and a
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deceased taxpayer return
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but um you know it's just costing you
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money basically if you're not um
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including that information
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now
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what is so these are the five things
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that we went over the five tax mistakes
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that you're doing
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for being
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disorganized so what is the solution
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there's a simple solution and wait for
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this
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yay so basically what it is is just
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have a big envelope have a folder a
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binder what have you
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and whenever you're receiving documents
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throughout the year
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you just you know you put it in that one
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envelope or the binder or folder
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and you know just label it with the
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texture and just put it in so whenever
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you're filing it's ready for you so
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whenever you're filing and you don't
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have time to organize yourself i mean
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the beginning of the year it's always so
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so hectic so you can just pick that up
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and you have all the documents there you
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can also use the computer and scan some
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stuff you also get you know you can
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obtain copy of many documents online
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nowadays now if you're filing yourself
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you want to make sure you keep a copy of
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your tax return from prior years so
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as soon as you're filing there's usually
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an option of downloading a copy you want
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to make sure you download the copy
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because especially if you're going to
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change your software
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um you know you're going to be
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trying to remember your login
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information from prior year and you
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might not remember
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also if you're filing with paid tax
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preparers many of these companies now
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allow you to have access online to your
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tax returns so you have kiwi
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access if you should change it in any
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point you have access to that so it's
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very important so it's a simple solution
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thanks so much for watching and i hope
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you just take that one simple step and
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keep yourself organized because that
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will save you money
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