Wait patiently for all your tax documents

Before calling for an appointment with your tax advisor or sitting down to work on your own taxes, make sure you have all the documents that you need. At this time, January 25, 2010, some people have all their tax documents, some are still waiting and some people think they have everything. Patience is important. Companies (those you work for, banks, healthcare companies, investment companies, etc) have until January 31st to have documents POSTMARKED. This year January 31st is a Sunday, therefore they have until February 1st. This means that paperwork will still be coming in mailboxes the first week of February. It is important to be sure you have all information when preparing your return.

Debt Forgiveness
Many people do not often realize that debt forgiveness is income on their tax return. People often work with credit companies to reduce the amount of debt owed to the credit cards. This can be done personally or through an attorney. When this happens you will owe less to the credit card company BUT this amount that is "forgiven" is taxable income on your tax return. The credit card company issues a 1099 for the amount and that is reported to the IRS as well. If it is not reported properly on your tax return, the IRS will send a letter and in addition to the taxes owed, they will add a penalty for non-reporting as well as interest.