How time flies! It is February, and winter will soon be on its way out. Spring is coming soon, and if you haven’t done so already, you might want to start thinking about your financial situation. This is especially true when tax season comes along – we believe that it is never too soon to start planning for taxes. Considering that 2010 has only just begun, it is only right to get the ball rolling on the tax situation as well.

Taxes can be a make-or-break kind of thing, especially for most families. A lot of money is lost to taxes, and it would be a shame if this figure balloons. Taxes are assessed on a lot of items: Property, real estate, expenses, income bracket and more.

This is stressful not just because of the prospect of handing would-be disposable money to the government. There is always a danger of incorrectly filing one’s returns. It may not seem like much to some, but incorrect filing has been known to result in tax evasion criminal charges, especially if state fact checking proves you in the wrong.

So what do you do to keep this from happening? Here are some useful ideas to keep in mind:

1. Record-Keeping
It never fails. You may end up having a huge dump of papers, but it can definitely save you money someday.

Keep the following papers safe at all costs:
- Form W-2 and 1099
- Bank statements
- Sales slips
- Invoices
- Credit Card Receipts
- Cancelled checks, or other proof of payment
- Insurance Records
- Home purchase and sales agreements
- Mutual fund documents

You will need to refer to these at times, because they contain information that helps you get the accurate figures you need when doing your tax paperwork.

2. Personal Accounting

Related to number one, but a bit more complex. Good record-keeping is what you do to learn how much you own. The other half of that is the accounting you do with your own funds, or rather, how much money you’ve got to spend. Come tax season, it is virtually impossible for you to have nothing left in your bank account, but it has happened before. Worse, there are scenarios when someone is assessed to still require additional payments, but lacks the funds to do so. It is a troubling encounter where things had to be mortgaged, pawned or sold, or money had to be borrowed, in order to get by.

Keep in mind the lessons learned in the earlier pieces we wrote last year for ways to make money, or to put money away. It should come in handy in keeping things sane.

3. ‘Non-Taxable Income’

And no, we’re not talking about running an illegal operation in your backyard. Rather, look for little jobs on the side that you can do without having to declare in your taxes.

For example, if you are earning interest from your bank account, it is important to figure how much of it is taxable, and which part is non-taxable. Then, in your record books, treat everything that is non-taxable as your ‘real’ interest earnings. This spares you a major headache further down the road.

Other income streams have portions that taxes can’t touch. Try not to spend this money, because it’s one of the most certain earnings you will see.

Any more ideas? Let us know!