Over the past month or so, I often have written about getting your documents together in preparation for filing your taxes. I thought that this week I should take the time to actually expand upon that, and talk about what documents this could include. Please recognize, however, that this is really only the large-picture view, that everyone’s situation is different, and this is far from comprehensive, but hopefully will keep you thinking in the right directions anyway.
First off, since we are paying taxes because we earned some money, you’re going to need the documents that show just how much you earned. So get W-2 forms for any job you had in 2017 (and for the purposes of this article, “you” means you and your spouse if you are filing as married). This also means any side-work you did, however, and you should receive a 1099 form for any of that that earned you more than $600. Then there is income from any business you own (so you will need those accounting records), any interest earned from investments, any money received from unemployment, social security, jury duty, or gambling winnings.
Overall, remember that if you receive a tax form saying you got some money, that information was also sent to the IRS. So even if it was only a few dollars, you want to be sure it is included on your return. Yes, it won’t affect your tax return that much, but you want your numbers to look like the IRS expects them to look.
After income, we have to start looking at ways to reduce how much you owe, and some of these deductions and credits will have also come with tax forms, such as mortgage interest paid and student loan interest. You also want to track contributions made to retirement accounts and medical savings accounts.
There are some general purchases you made that could become deductions. These are especially important if you have any qualified business expenses. And realize that getting tax numbers together is much easier if you provide receipts instead of saying, “Well, I had lunch with a client once around March and it cost about $50.” Even if you don’t have a business, though, there could be some expenses that were necessary to complete your job, and if you were not reimbursed for those, they could also qualify as deductions.
Beyond those, however, any costs that you had for education and child care can lower your tax liability. And if you added a child through adoption, some of those costs will also benefit your tax picture. If you had a number of medical expenses, you will also want to document those, as well as any moving expenses and charitable contributions.
Finally, there is also more basic information needed that some people can overlook. If you’re filing taxes with someone who doesn’t already have the information, you’ll need social security numbers for you, your spouse, and any dependents. And if you are expecting a refund, having your bank’s routing number and account number handy will help you get that money as quickly as possible.
Again, this is only the bare skeleton of what can be needed for a full tax return. I wanted to put out the biggest ideas, though, that one needs to think about when it comes to tax preparation. Thankfully, if you are already thinking about these things, then you have time to find everything you may need and get all that is owed to you. Also, at this time of tax season, we still have plenty of appointments available and are eager to help you in this endeavor.
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To ensure we don't make the folks at the IRS ornery, we inform you that any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein.