Tax Preparation

The taxman cometh. Are you ready? Technically, you should have already at least finished your taxes, if not mailed them in. However, if you are like this author, you are still sweating. Well all know, taxes are important, especially this year, when you are eligible for a refund. But what if this is your first year paying taxes, and you don't know where to turn, or where to start? In order to fit taxes into your budget planning, here is a small guide, which by no means replaces talking to your parents, a financial adviser, or just a really good friend that's an accountant.

The first thing that's important to stress is that you want to keep all of your pay stubs. All of them. You should also get a complete pay stub at the end of the filing year) sometime in January) from each place of employment over the past year. This can get complicated if you were in school, so make sure all your stubs are sent to the same address. Also keep track of any retirement accounts you've opened, money you've given to charity, any money you spent in a move…all of this is fair game for tax deductions.

The basic way taxes is work is, you fill out a W4 form when you start each place of employment. They withhold money from your paycheck on a local, federal, and state level, which is indicated in each paycheck. This is taxes already taken from you. Essentially, if you play your cards right, at the end of the year, you shouldn't owe the government money, but just need to officially account for all the money you've paid already. Getting a big refund means you've overpaid your withholdings for the year and are essentially giving the government an interest-free loan, which is bad. Paying too much money in taxes can also be bad, on a case-by-case basis. Best is to try and keep an even keel.

Next, keep in mind that there are usually three tax forms to fill out. Federal, state, and local. For example, for the State of New York, you would have to pay federal taxes to the IRS, state taxes to the state of New York, and, if you live in Manhattan, probably local taxes to the Manhattan city borough. All local taxes are different, though, so check with your local municipality about what kind of taxes need to be paid. Google is the best source of information for this kind of thing if you've just moved to an area and are not sure where your municipality is.

Once you figure all this out, get the necessary tax forms well ahead of time. This includes at least the forms called 1040 or 1040 EZ . The latter can be used if you make less than approximately $56,000 a year for the 2007 return. This form is much simpler than the 1040 in that it doesn't include itemized deductions (money that can be refunded to you depending on certain criteria that you meet.)

You can find both of these forms, as well as other additions to tax documents, at your local library. It's best to have all printed forms ready for reference in case you need to present any of them or reference a given part. A great resource for all of these forms is online, at www.irs.gov. There, you can fill out all the forms in PDF and read the instructions. Read carefully and happy filing!