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Tax Tip 3: Get Detailed Data
like a Professional:
Have you noticed
that most web-based reports, including 1099 documents, are (.PDF) pictures
of your data? Do you get that unsettled feeling when you think about
how to use that data? What if you could get real data and use it
yourself or give it to your Tax Professional? The answer is it will
save time and money. This is why we must think differently and sort
out a more efficient process.
Paper and pictures
are for people, but computer like data. Have you ever tried to work with
a .PDF picture of transactions to generate something by using Excel? The
average user can only open a .PDF, save it, print it or e-mail to
someone. These document are good as a visual reference but are a real
pain to use their content.
Consider the
following choice. You have 200+ trades and you provide your Tax
Preparer a paper copy of a 1099 document. At this point someone must
type the data
into a program to generate the Schedule D and the tax return. Did you
know that this is expensive work? The reason is because it requires a
combination of clerical data entry and knowledge of how to generate tax
lots plus knowledge of how to resolve issues that occur with the data when
trades don’t reconcile.
In summary unless
you only have a few trades it is worth your team to learn how to get the
data in a file format that a computer can use. You can then
deliver the data to your Tax Preparer or you can deliver a Schedule D to
your Tax Preparer. Either will save time and cost less than manually
typing each trade.
Action Step -
Let's spend a few minute to sort out a road-map for your data.
-
Log into your
brokerage account and find the tax information page.
-
Mouse around with
the search feature. Try a search for “Tax Tools” and “History.”
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Look for the data
download section and see if there are instructions on how to get data
for usage by tax software. They might offer a download to Excel or
other software.
-
Make a few notes
regarding the download formats supported and the software supported.
-
Print out samples
of the pages for future reference or to give to your GoTo Tech person.
If this is your
first venture in this area then take a break after 15 minutes and reward
yourself for covering new ground. Next time it will feel faster and
easier. If the pages are confusing then send e-mail to support and
ask for help. Ask them your questions. Your goal is to pick a data
format that will allow you to get your tax year Buy and Sell information
in a file.
If you are going to
generate some of the tax documents yourself (like the Schedule D) then
contact your broker early and ask for guidance regarding Schedule D
software.
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