Tax season is upon us. Preparing now will save you a headache down the road. Proper planning, whether you meet with a tax professional or prepare your taxes yourself, may save you some costly errors.
Read through the tips below and prepare yourself to tackle this tax season with confidence.
Beginning in January, you’ll start to receive the documents in the mail. It is helpful to make a list so as you don’t forget any. If you receive electronic documents, you may need to log in to retrieve your tax documents. Once you have received your documents it is helpful to glance over them to see if there are any glaring errors, that way you have time to contact the sender for changes. A simple misspelling can cause issues with your tax return. Inspect all documents carefully.
Examples of these documents include:
· W-2s for employment
· SSA-1099 for Social Security benefits
· 1099s for additional income, interest, gains, and losses
· 1095-A for government marketplace health coverage
· 1098s for reporting interest and tuition payments
· W-2Gs for any gambling winnings
If you are a business owner or plan on itemizing your deductions, gather your expense records so that you can take advantage of any available write-offs. This can include receipts for business expenses, medical expenses and other expenses that can be listed on your Schedule A or Schedule C. These can be physical receipts or account statements showing payment. To make it easy on yourself you can organize them by type to locate when filing.
You may have made donations throughout the year to one or several tax-exempt organizations. This could be a write off. In the past, deductions were only for those who itemized. However, the CARES Act, has allowed filers who choose a standard deduction and may be eligible to write-off up to $300 in charitable contributions.(1)
Some donations will still require an itemized deduction and/or documentation. If you haven’t saved receipts, you can ask the organization to provide you with documentation.
I’m sure you know your social security number by heart. I’ve seen some rattle off their spouses as well. If you are claiming any dependents, it is a good idea to locate and write down their full name, social security number, and birthdates. This helps with easy access and ensures accuracy. Have you bought and sold any properties? Be sure to write down the address and dates on which they were bought or sold.
You should have a copy of last year’s tax return for your records. If you are using a new preparer this year it is extremely helpful to have a copy. This allows them to make sure nothing is overlooked.
Tax preparation can be overwhelming. Ease the stress by making small preparations now and you will thank yourself later.
This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.