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The end of the year means its tax time
Prepare to gather receipts and documents
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Outside of being the last day of the year, today also has other significance.

Additionally, it is the last day to make charitable contributions and other payments that can be used as tax write-offs for 2009.

“The donations count towards 2009 if they are received before midnight,” said Mark S. Green, IRS spokesperson.

“If you plan to make a late contribution, I would recommend using a credit card.”

In addition to making last minute donations, now is also the time to gather receipts and other documentation needed to prepare a tax return.

Outside of saving the usual W2 and 1099 forms, IRS officials also urge taxpayers to hang on to any year-end statements related to government benefits like Social Security. Taxpayers will also need to retain documentation for any tax break claimed on a return.

For example, if a taxpayer had a job-related move in 2009, he may receive a tax deduction for some, if not all moving expenses.

However, in claiming such a deduction, taxpayers will need to retain receipts to back their claims.

If you are tempted to throw out old receipts and documentation associated with previous tax returns, you may want to reconsider.

“The length of time you should keep a document depends on the action, expense or event the document records,” said Green.

“Generally, you must keep your records that support an item of income or deductions on a tax return until the period of limitations for that return runs out.”

To err on the side of safety, Green recommends retaining receipts and documentation for the duration of ownership of that particular item. For instance, if you claim a tax credit for purchasing a hybrid or electric vehicle on your 2009 return, you should retain the documentation supporting the purchase until you sell or dispose of the vehicle.

And if you are trying to decide between itemizing your tax return or taking the standard deduction, Green said the best advice is to use the method that is most advantageous for you.

The standard deduction for single filers is $5,700 and $11,400 for joint returns. However, if you did things like pay local and state ad valorem taxes or paid interest on a student loan or mortgage, you may want to consider itemizing, Green said.

Even if a taxpayer doesn’t itemize his return, he could still be eligible for various deductions including amounts paid in real estate taxes and purchasing a new vehicle.

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