Open those envelopes

It’s that time again. When important envelopes come flying into your mailbox. These envelopes usually have BOLD text on the front that say something like

 IMPORTANT TAX DOCUMENT ENCLOSED.

What do you usually do with those envelopes? Just pile them up?

Aren’t you just the least bit curious about that important  information?

Why not do something different this year?  After all, you are older and wiser now.

Sooooooo

OPEN THE ENVELOPES!

READ THE FORMS!

Then file them in a  careful TAX file, so you can start getting more organized about your money.

In addition, your clever organization will help you get ready for taxes, early. And maybe file early so you get your refund early!


Those are some good reasons to open them and read them. So let’s tell you what to expect and why you should read them.

In January, here are 2 kinds of documents that come in the mail. The first set of envelopes hold statements that tell you how much money you (and/or your partner) made last year. The second set, usually 1099 forms, tell you how much you earned in dividends or interest, and provide other information.

Focus on the first set of envelopes. There are thick ones, and very thin ones.

  • The thin envelopes hold forms called W-2 (forms).  A W-2 tells you  how much money you (or your partner) earned last year.
    • When you see a W-2, look for Box 1. It lists WAGES, TIPS AND OTHER COMPENSATION. What is the dollar amount? That’s your “gross” or total income. The amount that you get paid before all the benefits and taxes are taken out. That is a good number to know. And, it is an important tax document. You will need it to fill out your income tax documents and send it to the IRS. So put it into your new Tax File.
  • The thick envelopes tell you how much money you hold in your retirement accounts, and other accounts at banks and investment houses. These are year-end statements. So grab them, and read them so you know how much money you held in each account on December 31 of last year. Then go one better. Add this information to a list, your List of Assets. (See the Tools menu for the template you can use.) Make this a New Year’s Ritual. Every year, write down how much money you hold in each and every account. Then add up the total. This total  is another important number to know.

Now let’s look at the second set of envelopes. They generally come from Banks or other financial institutions . They tend to hold forms called 1099s.

  • 1099 form tells you how much interest (1099-INT) or dividends (1099-DIV) you earned in each and every account that you hold. There are also 1099-R forms and 5498 forms that list IRA accounts, and contributions made to retirement accounts.

While these forms may seem boring, they actually can help you understand a lot about your money. Let’s say you don’t remember how many accounts you or your partner holds. Well, these forms remind you. Each one lists the name of a bank or financial institution that holds your account your partner’s. And it tells you

    •  the type of account (like savings, or investment or retirement)  held at that Bank
    • the account number
    • and the name of the person, or persons who own the account and control the money in it.

So if you forgot to include 1 or 2 accounts in your List of Assets, these 1099 forms can remind you of their existence. After all, Hot Flash Financial wants you to keep track of every account that holds your hard earned money. So pile all of these 1099 forms into your Tax file, and use these forms to cross-check your holdings.

If you find more accounts, add them to your List of Assets. Then track down the total dollar amounts held in each and write it on your List of Assets.  When you add up your total balance, you will really be happy to see value of your assets grow!

So watch for these envelopes. Open them up and read them. Use them to update your List of Assets.That way you will  know how much money you have. And, you can get organized for tax time.

You will be glad you did.

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If you get all your tax documents organized you can file your income taxes early. THAT MEANS YOU CAN GET YOUR REFUND EARLY!!!!

January 15— Open those envelopes!

It’s that time again. When envelopes come flying into your mailbox. These envelopes usually have BOLD text that says something like

 IMPORTANT TAX DOCUMENT ENCLOSED.

What do you usually do with those envelopes? Just put them in a neatly marked folder?  Or a shoe box?

Aren’t you just the least bit curious about that important  information?

 

Why not do something different this year?  OPEN THE ENVELOPES! Then  READ THE FORMS!

Why?

They tell you precisely how much money you brought in the door last year. So you know how much you made, and, if you have  a partner, how much income your partner  earned.

Now don’t be intimated by the forms. Hot Flash Financial can tell you how to read them. So you can skip to the important parts.

When you see a :

  • W-2  scan up or down the page to find Box 1. that lists WAGES, TIPS AND OTHER COMPENSATION. What is the dollar amount?
    • That’s your “gross” or total income. The amount that you get paid before all the benefits and taxes are taken out.

When you see a form that says

  • 1099  that  tells you that you, or your partner,  made even more money. It could be money from the interest paid on a savings account (that will be a 1099-INT). There are other types of 1099 forms, that report other types of income.

Now, Hot Flash Financial is going to encourage you to  ADD up the totals and find out how much money you (and your partner, if you have one)  earned. This total dollar amount is good to keep in your head.  You not only know how much money your make. This dollar figure gives you an idea of how much of that you need to live comfortably. Keep that in the back of your mind too.

So watch for these envelopes. Open them up and read them. Most of them come by the end of January,

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Hot Flash Financial HOT TIP. Now, if January ends, and you do not get any 1099s, why not file your tax return EARLY? Then you will get your TAX REFUND EARLY. Why wait? It’s your money.

And Hot Flash Financial has so many good suggestions for using that moneyà to improve your financial security, Click on the ASK & ANSWER navigation buttons (above). Try the Menu Option called Getting Started. Follow the suggestions.  Make sure you do something really important for yourself. ACT! Act in your OWN SELF INTEREST. Follow the steps we give you. So you can improve your finances, decrease your money stress, and get more secure, financially that is.