Prosper Newsletter: February 2006 > Financial

You understand that the following information is educational in nature and is not intended to be legal, accounting, or tax advice. You are responsible for your own financial decisions and should consult your own legal, accounting, and tax advisors before making your financial decisions.

Debt Student Pays Off Over $12k In Debt Since May, Finds What He Is Looking For!

I have paid off roughly $12,230.00 since beginning the sessions in May, which represents the complete elimination of 9 debts and a reduction through payments on others.

Debt Free - Using the accelerated Debt-Free Plan, I will be financially free within 5 years and 8 months.  This is 17 years sooner than if I had tried to pay my debts off the way that most people do.  I will have save a total of $147,739.00.

If I invest the money I’m now wasting on debt payments ($5,427 per month, for 17 years and 5 months.  With a modest 10% annual interest rate, I will build a retirement fund worth $3,038.562, which would pay me a monthly income of $25,321 for the rest of my life.

This is what I was looking for.

- Mike B.
Covington, TX

Tax season is here and it's time to start gathering your documentation and preparing to file. Here is a checklist to help you get organized.

• PERSONAL DATA
  

  Social Security numbers (including spouse and children).These are required to qualify for exemptions.
  
  Your child care provider's tax I.D. or Social Security number. This is critical to qualify for child care credits.

• EMPLOYMENT & INCOME DATA
  

  W-2 forms for this year. These come from your employer.

  Partnership and trust income. Data for these should come from an accountant or financial institution.

  Pensions and annuities. Data should come from the financial institution, insurance company selling the annuity or pension fund.

  Social Security Railroad Retirement Benefits. You will need Form RRB 1099 or Form RRB 1042S for non-resident alien recipients of Railroad Retirement benefits.

  Alimony received. Tax information should come from your ex-spouse or his representative. Your former spouse will want your Social Security number to be able to deduct any alimony payments.

  Jury duty pay. Data should come from the court clerk.

  Gambling and lottery winnings. This data should come from the casino or lottery authority. Form W- 2G.

  Prizes and awards. Data should come from the award givers. Form 1099-MISC.

  Scholarships and fellowships. Data should come from the administrators of these programs. Form 1099-MISC.

  State and local income tax refunds. Data should come from the taxing authorities.

• HOMEOWNER/RENTER DATA

  Residential address(es) for this year. This is your responsibility.

  Mortgage interest. Your lender will send you this data on Form 1098.

  Sale of your home or other real estate: Form 1099-S. Your lender or closing agent should send you Form 1099-S.

  Second mortgage interest paid. Your lender will send you this data on Form 1098.

  Real estate taxes paid. Your county clerk or lender should send you this data.

  Rent paid during tax year. You need to generate this data.

  Moving expenses. If your expenses are reimbursed by an employer, the employer will furnish you with data on the moving costs.

• FINANCIAL ASSETS

  Interest income statements. Financial institutions will provide this data on Form 1099-INT & Form 1099-OID.

  Dividend income statements. This will come on Form 1099-DIV from the company paying the dividends.

  Proceeds from broker transactions. Your brokers should furnish this data on Form 1099-B.

  Tax refunds & unemployment compensation. The issuing agencies should send this information on Form 1099-G.

  Miscellaneous income including rent. This should come from whoever distributes the income on Form 1099-MISC.

  Retirement plan distribution. Whoever sends out your pension checks should send you this data on Form 1099-R.

• FINANCIAL LIABILITIES

  Auto loans and leases. Including account numbers and car value -- if vehicle used for business. You can get this data from the lender or leasing company.

  Student loan interest paid. The lender should furnish this data on Form 1098-E.

  Early withdrawal penalties on CDs and other time deposits. Financial institutions should provide this data.

• AUTOMOBILES

  Personal property tax information. This data should come from the taxing authority.

• DEDUCTIBLE EXPENSES

  Gifts to charity Receipts for any single donations of $250 or more. This should come from the charity.

  Unreimbursed expenses for volunteer work. You will need to keep your own records for this.

  Unreimbursed expenses related to your job. Travel expenses, entertainment, uniforms, union dues, subscriptions. You will need to maintain this data.

  Investment expenses. Your broker will furnish some data. Travel, phone and other related expenses are your responsibility to track.

  Job-hunting expenses. You will need to keep and maintain this data.

  Education expenses. You will need to keep this data. But if you qualify for Hope or Lifetime credits or other college deductions, the college involved will send you the data on the qualifying expenses you've paid.

  Child care expenses. You will need to keep this data.

  Medical Savings Accounts. The institution handling the account will be able to generate any data.

  Adoption expenses. You will need to track this data and be able to document these expenses.

  Alimony paid. You or the authority dispersing funds will need to keep this data. To deduct this expense, you will need the recipient's Social Security number.

  Tax return preparation expenses and fees. Your preparer can furnish this data to you.

• SELF-EMPLOYMENT DATA

  K-1s on all partnerships. The partnership management should generate this data.

  Receipts or documentation for business-related expenses. This is data you should keep and track.

  Farm income. You or an accountant should tack this information. You will need to prepare Schedule F.

• DEDUCTION DOCUMENTS

  Federal, state and local estimated tax paid for current year. Including estimated tax vouchers, cancelled checks & other payment records. You must keep copies of this data and track it.

  IRA, Keogh & other retirement plan contributions. You can get this information from your financial institutions.

  Medical expenses. You must track this data.

• CASUALTY OR THEFT LOSSES

  Other miscellaneous deductions. You will need to file Form 4684.