Super Bowl XL will kick off at 6:25 p.m. EST Sunday.
So it seems fitting that we kick off our series of tax season tips around the same time. I mean, you really can't talk about football without talking about taxes anyway, right?
Well, to start with, any money you win from Sunday's game is taxable. (Sorry to be a buzzkill.) Granted, those winnings will go on your
return, but if you won anything from last year's game, you'll have to report that money this April.
Remember, you're required to report all your gambling wins on your Form 1040. So any money youreceive from your office pool or bookie must be reported on your tax return.
The upside is that you can deduct any gambling losses to the extent of your wins. So if you happen to win big this Sunday, be sure to start saving all your loser lotto tickets going forward so you can authenticate those losses and attempt to offset your tax hit.
As far as last year's big winnings, go dig up your 2005 gambling losses, like the receipts from that rough Vegas trip, so that you can soften this year's tax blow as well.
And while you're searching for coffee-stained lotto tickets and failed Atlantic City trip receipts, it's a good time to look for other records from last year.
To start, gather your charitable contribution documentation. You need written acknowledgement for donations of $250 or more, reminds Bob Scharin, editor of Warren, Gorham & Lamont/RIA's
Practical Tax Strategies
, a monthly journal written for tax professionals. If you don't have it, you still have time before you file your return to get in touch with the charity and ask for a letter.
In addition, if you're going to itemize your deductions, as opposed to taking the standard deduction, make sure you have receipts for other write-offs, like your work-related expenses, any job-hunting fees you may have incurred, and all of your out-of-pocket medical expenses.
If you did any stock or mutual fund selling last year, make sure you know your original purchase price as well as your sales price. While most brokers give you this info, they are not required to do so.
For all you self-employed folks, the IRS pays special attention to your deductions because they're easy to fudge. Travel expenses, meals and entertainment expenses, and business gifts are susceptible to questioning, so be sure to have receipts. And when deducting cell-phone or Internet-usage bills, make sure you only deduct the portion of the bill that pertains to your business.
Now is also a good time to determine whether you're going to deduct your state and local income tax paid or your sales tax paid in 2005. Theoretically, 2005 is the last year for that choice, but rumors abound that the folks in D.C. will extend it.
So think back through your purchases. Open your checkbook or pull up your online bank statements to refresh your memory. Sometimes it's hard to remember (or maybe you chose not to remember) what you bought last Valentine's Day for a sweetheart who's no longer around. But if you were generous, you could at least get a tax break for your troubles. If your sales tax paid exceeds your total state and local income taxes paid, you may want to deduct those payments instead on your Schedule A.
You should have gotten all of your W-2s, Form 1099s and Form 1098s by now. Those forms report all your wages, interest and dividends earned, as well as mortgage interest and points paid on any loans you may have had outstanding. "Look through them and see if they are accurate," suggests Scharin. If something seems awry, you can reconcile any problems before you sit down and prepare your return.
That is, if you're even going to prepare it yourself. Now is also the time to decide who's going to do the dirty work. If you're a do-it-yourselfer, go get a good software package -- please don't do it by hand.
If your life is getting too complicated, then consider hiring someone. But do it soon. You want to get on that person's calendar before March. Tax preparers get busy and, well, cranky (hey, I was one) as they get closer to D-day. They will not appreciate it if you show up with a shoebox full of receipts on April 13 and demand to have your return filed on time.
In addition, be sure to ask about their fees. Granted, sometimes unpredictable things happen during the preparation of your return that may cause your bill to increase, but you should have a ballpark figure so you're not totally floored when the final number is calculated.
You have until April 17 (April 15 falls on a Saturday this year) to make your IRA contribution. So go do that if you haven't already. And if you turned age 70-and-a-half in 2005, be sure you follow the IRA rules and take your required minimum distribution by April 1. If you don't, the IRS will slap a 50% excise tax on the amount you didn't take but should have.
So I say bet on that cutie Matt Hasselbeck and his Seattle Seahawks. And get fired up. It's going to be a great game -- and an even better tax season, because we'll be here to give you the play-by-play.
Tracy Byrnes is an award-winning writer specializing in tax and accounting issues. As a freelancer, she has written columns for wsj.com and the New York Post and her work has appeared in SmartMoney and on CBS MarketWatch. Prior to freelancing, she spent four years as a senior writer for TheStreet.com. Before that, she was an accountant with Ernst & Young. She has a B.A. in English and economics from Lehigh University and an M.B.A. in accounting from Rutgers University. Byrnes appreciates your feedback; click here to send her an email.