Rejoice, all ye procrastinators! The Internal Revenue Service announced Wednesday that the lucky folks who live in Maine, Maryland, Massachusetts, New Hampshire, New York, Vermont, and the District of Columbia get an extra two days to prepare their tax returns next spring.
It seems they have Patriot's Day to thank, a holiday celebrated in Massachusetts and Maine to honor the first battle of the American Revolutionary War. It's also the traditional day for the Boston Marathon.
Next year, the celebration's spreading through the Northeast, where people will be spending their extra 48 hours of tax time staying up late, drinking cold coffee, sorting through paperwork, looking for lost receipts, wandering through computer preparation programs, and scolding the cat for sitting on the calculator. Or, maybe you're planning to make a last minute dash to get someone else to deal with the whole problem.
Whether you're the do-it-yourself type or you're more likely to pay a professional, everyone could benefit from starting a little tax housekeeping right now. That's because the end of the year can generate much of the paperwork that you'll be looking for in a few months when those forms come due.
Many of us can accomplish this with one folder labeled "Tax Stuff." People with more complicated situations might want to split their filing into a couple of categories, like income and deductions. The trick is to file things away in those folders when they cross your desk, not to just toss them in the pile with the junk mail, the catalogs, and the Chinese takeout menus.
So, file away your records from some of the things that taxpayers typically think about toward the end of the year.
Charitable giving. We generous Fools make 50% of our charitable contributions between Thanksgiving and Christmas. (That factoid courtesy of Charity Navigator.) You'll want to remember that generosity come tax time, so you can claim a deduction if you're entitled.
Some people can be even more generous than usual this year. That's because a recently passed pension law lets individuals aged 70-1/2 and older make a donation straight from an IRA worth up to $100,000. The offer is available for a limited time. It lets you avoid taxes on the IRA distribution, but you can't take a deduction for the donation.
That new law will also require you to keep records of all cash donations, so it's probably best to start getting used to that now. You'll need a receipt, a canceled check or a credit card statement to prove your donation. Stick them in that folder.
Incidentally, while we're on the topic of the spirit of giving, you might want to check out the Foolanthropy charity drive. Read all about it in "When Fools Unite" and make your nominations for worthy charities on the dedicated discussion board. (But hurry! The nomination period ends November 10.)
Volunteer work. You may be donating time, not money, during the holidays. Charitable organizations need a small army of elves this time of year to distribute donated presents and meals, or staff contribution buckets. Make a note of any expenses, including mileage, and file that away in your folder. These expenses can be tax deductible.
Stock sales. This is about the time of year when investors decide to dump stocks that were naughty, not nice. File away the confirmation that your broker sent you with your tax information to remind yourself that you'll be reporting your gain or loss on your tax return.
For extra credit, you could pull any other paperwork related to that stock, such as the confirmation you got when you purchased it or any notifications of stock sales. You can worry about the mind-bending complexity of computing that gain or loss later.
IRA contributions. You have until the tax deadline to make your IRA contributions, but why not get the money into that account a little early and have it start working for you? Some IRA contributions can be deductible. If yours isn't, you'll probably want to keep a record on hand anyway. File away a reminder of your deposit.
You probably have a million other things to worry about right now, but a couple minutes of organization now could save a pretty big headache in a couple of months. Besides, think how smug you'll feel when the tax forms and statements start to arrive in February and you've already got a place to put them.
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Fool contributor Mary Dalrymple thinks tax preparation software is the best invention since sliced bread, and she welcomes your feedback.
