When filing taxes, it helps to be organized and get ready early.

A week or two before I file my taxes I will make sure I have all my documents ready. How do I prepare?

I take two separate steps. The first step is to consult a tax checklist which is a list of documents that I might need to file taxes. This is a comprehensive list of possible documents.

The next thing I will do is to glance at my tax return from the previous year. This gives me an idea of the forms I got the previous year, and it will remind me to double check I got all of those forms.

This is particularly important for a couple of online accounts for which I have to print my 1099-INT statement. It also reminds me to check that I included relevant business expenses and special deductions.

And here’s the key part: I do this a week or two in advance. If I’m missing a document, this gives me time to request it or find the information.

These are both simple steps, but they can make filing taxes less of a hassle.

image by David Morris, CC by 2.0

The primary benefit of saving money still motivates me to track expenses. But there are also a lot of neat little side benefits of tracking spending too.

A spending and income summary, for example, turn out to be extremely useful things to know during tax preparation. Today I want to explain how I use my free expense tracking spreadsheet to help me organize and file taxes.

(Remember I’m not an expert so just consider these 4 benefits as friendly advice, and always make sure to consult a qualified professional for tax help)

1. Verifying gross income

I write in all my income in the simple expense tracker. Specifically, my income gets tracked in the spreadsheet at “Step 3: Pre-tax (Gross) income” as shown below:

Basically every time I get a check I will input the before tax income in the appropriate month. This is very easy to do if you have a regular paycheck in an office job. It takes a bit more diligence to do as a freelancer, but it’s still worth the time.

Why? When tax time approaches, I can then cross check the income figure against the W-2 or 1099 forms I get.

This sounds a bit obsessive, but you’d be surprised how often companies mess up W-2 forms. Best to have your own records and make sure the numbers you get are correct.

2. Verifying taxes already paid

Throughout the year I keep track of Taxes paid in my expense tracker under “Step 2: Individual Expenses.”

Then, at the year end, I will reconcile any statements against my record of total category spending for taxes in “Step 5: Category Analysis and Budgeting” as follows:

Note I usually only keep track of total taxes, and I make sure the sum matches the year end statements that I get. One could be more precise and keep a tally of federal, state, and other taxes.

3. Tracking business expenses

If you have your own business, you probably need an entirely different accounting system to keep track of all the things you buy. You want to have a detailed record so you don’t miss out on deductions.

If you just have a small, side business, however, then the simple expense tracker could be of help. Whenever you have a business expense, you can enter that in the spreadsheet under the category “business.”

To be even more precise, you could even have a separate spreadsheet just for your business expenses. That way you could tally up total spending but also know which categories you spend money.

4. Itemizing special tax deductions (charity, health, etc.)

The simple expense tracker is also great for keeping track of special category spending. Just input these expenses with their own special category, and the summary statistics in “Step 5″ will give you a total spending for the year end.

On a closing note, filing taxes is never fun or easy, but it can be made easier if you stay organized. Track your expenses and you’ll both be organized and have a great grasp of your finances at the same time.

Here is the link where you can download the spreadsheet: Free expense tracker

These are just a few of the questions people will be searching for with tax time just around the corner.

These days, it will not be hard to find the answers online. There are so many good financial websites that you can undoubtedly find the right answer. Unfortunately, there has also been a big growth in unreliable websites too.

The smart consumer has to take extra steps to verify that information found online is accurate. Here are 4 of the common mistakes you should avoid.

Mistake 1: Only reading the first Google result

It’s great to be the first result in a Google search, but it’s silly just how important being first is.

One study found that the first result generated TWICE as much traffic as the second result, and more traffic than the slots 2 through 5 combined. That means a ton of people only clicked on the first result and ignored any subsequent search results.

Yes, these days we all trust Google to deliver quality search results. But don’t take that trust blindly! You will often want to look beyond the first result to verify the information.

Example: When I do a search for “tax brackets 2011″ I am sent to a website called www.taxbrackets2011.com. I have no idea if that site is credible, and the contact information directs me to a PO Box in the state of Washington. Why in the should I trust that result? The site has a high result in part because it has probably optimized itself for Google’s search algorithms. This is not comforting me the site will always have accurate information.

Personally, I will go ahead and look at the second result, from the IRS website, and the third result from the authoritative site bankrate.com to be convinced the information is accurate.

Mistake 2: trusting blogs and expert opinions

Don’t get me wrong, I love blogs and expert opinions. These are often some of the most useful articles as the person has not only read information, but they have often made it accessible and given some personal information.

That said, there is no way I am going to read just ONE opinion and be convinced. I am especially skeptical because so many blogs and experts are shilling out products.

Example: this is not a tax example, but it demonstrates the point. If you do a search for “southwest rapid rewards card worth it,” you will find almost no useful information. Most websites that mention this card are often just trying to get you to sign up for the card. You will have to do your own math about whether the miles and annual fee are suitable for your spending needs.

Mistake 3: Reading outdated articles

It’s not good enough to find information online. Ask yourself: WHEN was the article written?

The tax code has major changes every year, and you have to be sure you are up to date.

You can restrict your search on Google, as of this writing, by clicking on a menu on the left side of the page that restricts searches by date. I find that with tax information it is useful to look for “past month” or “past year.”

(If you’re unsure how to do this advanced search, there is some documentation here)

Example: Do a search for “are frequent flyer miles taxable.” As of this writing, the first few results are from years ago and are not accurate information. You have to do a search limited to the “past month” to find an article from the LA Times that explains how Citi is sending tax forms, but the IRS stance is still unclear.

Mistake 4: Overlooking the IRS website

The IRS website is the only site I ultimately trust when it comes to taxes. This is really a non-point, except when you consider how many people trust articles without checking the source of the tax code!

I always try to verify information from the IRS after reading it on a blog or somewhere else. Sure, it takes a little more time to go through the documents, but it is worth it.

To check the IRS website, do the same search but add this to the end of your search: site:irs.gov

Chances are you’ll get pointed to the official document that explains what you want.

Bonus tip: remember to use CTRL + F!

I would think people know how to find a term on a page. And yet one survey found that 90 percent of people are unaware of the CTRL + F shortcut!

I can’t imagine how much time they waste trying to scan the page for the information.

It’s also a time to take action. Because many financial activities like taxes and insurance are based on the calendar year, it’s important to take care of some things before the new year.

Spending an hour or so on your finances now can help you save a lot of money. I’ve done a bit of research to find out some of the most important tasks you should look at before the year ends.

Here is my 12 item year end financial checklist. Even if you are short on time, I would suggest you try to get a few items done. Most don’t take very long. Here’s the checklist:

Printable PDF

For completeness, I will mention one more item:

(Debatable) 13. Sell investments for tax writeoff: I originally had this item on the list, but this strategy depends on knowing a lot of things about the market and taxes. Also, I recently read an article about how “loss-harvesting” can backfire. It’s something to discuss with your financial advisor.

So that’s my year end financial list.

What items do you have on your list?

Look at the graph for the search term IRS in the United States:

The graph generally has two spikes yearly. Why might this be? I’ll take a guess.

The first spike is in Jan-Feb when people are probably double-checking definitions and new rules (what is a dependent, how much charity is deductible, etc)

The second spike is for April when people are likely scrambling to file near the deadline.

(And if you’re wondering, the lower, more regular graph, is about news references and shows fewer spikes.)

I’m working on tax stuff now…not quite last minute, but definitely contributing to the March traffic.

How’s your tax prep going?