Are you prepared for tax season? Whether you handle your own taxes or rely on a tax professional, gathering the necessary documents in advance is crucial. Being organized will not only save you time but could also save you money if you’re paying an hourly fee to a tax expert. In this article, we’ll outline the key documents you need to have on hand before filing your taxes. So, let’s get started!
Your Identity and Your Tax Return
To begin with, you’ll need the full names and Social Security numbers (or other taxpayer identification numbers) of everyone listed on your tax return. This includes your spouse, dependents, and any other individuals you may claim. If you use online tax software, this information is often saved for future use. However, if you prefer a tax preparer, you’ll need to provide them with your Social Security cards and a government-issued ID card.
Sources of Income
Next, you’ll need to gather all the tax documents related to your income sources. These documents are usually sent to you by the respective senders and the IRS at the beginning of tax season. Here are some common forms to expect:
- Form W-2, Wage and Tax Statement
- Form 1099-NEC, Nonemployee Compensation
- Form 1099-A, Acquisition or Abandonment of Secured Property
- Form 1099-B, Proceeds from Broker and Barter Exchange Transactions
- Form 1099-C, Cancellation of Debt
- Form 1099-DIV, Dividends and Distributions
- Form 1099-G, Certain Government Payments
- Form 1099-INT, Interest Income
- Form 1099-K, Payment Card and Third Party Network Transactions
- Form 1099-MISC, Miscellaneous Income
- Form 1099-Q, Payments from Qualified Education Programs
- Form 1099-R, Distributions from Pensions, Annuities, Retirement, etc.
- Form 1099-S, Proceeds from Real Estate Transactions
- Form 1099-SA, Distributions from HSAs, Archer MSAs, or Medicare Advantage MSAs
- Form SSA-1099, Social Security Benefit Statement
- Form W-2G, Certain Gambling Winnings
The most common income document is the Form W-2, which summarizes your income and withholdings from your employer. If you have a side gig or work in the gig economy, you may also receive a Form 1099-NEC. Other forms like the Form 1099-INT and Form 1099-S may be relevant depending on your financial activities throughout the year. Make sure to keep these forms for your records.
Deductions or Credits
If you’re eligible for tax deductions or credits, you’ll also need specific documents to support those claims. Here are a few common forms related to deductions or credits:
- Form 1098, Mortgage Interest Statement
- Form 1098-C, Contributions of Motor Vehicles, Boats, and Airplanes
- Form 1098-E, Student Loan Interest Statement
- Form 1098-T, Tuition Statement
These forms provide important information for deductions and credits related to mortgage interest, charitable contributions, student loan interest, and educational expenses. Additionally, if you plan to itemize your deductions, be sure to keep copies of relevant tax receipts, medical bills, charitable contributions, and retirement contributions.
Taxes You’ve Paid
Don’t forget about the taxes you’ve already paid throughout the year. If you’re an employee, your federal taxes are typically withheld from your paycheck by your employer. Your Form W-2 will include this information. For those with side gigs or contract jobs, you’ll need to pay your own income taxes. Quarterly estimated tax payments can be made using Form 1040-ES vouchers or online through the IRS website. Keep records of these tax payments as they will be required for your tax return. Additionally, save receipts for local income tax, property tax, or sales tax paid on significant purchases as they may be eligible for itemized deductions.
IRS Identity Protection PIN
If you’ve been a victim of tax-related identity theft, the IRS will assign you an identity protection PIN. This PIN is an extra layer of security for your tax return filing. Make sure to keep the CP01A notice containing your PIN, as you’ll need to enter it when filing your tax return.
Time Stamp: Save Time and Money
Preparing for tax season ahead of time will save you both time and money. Having all your tax documents in order is essential, whether you file your taxes yourself or use a tax professional. Consider using tax-planning software like Playbook to optimize your financial investments and maximize your tax benefits. Other popular tax-filing software options include TaxSlayer, TaxAct, and TurboTax.
Personal Finances Blog offers valuable insights and resources for managing your personal finances efficiently. Stay tuned for more tips and tricks to improve your financial well-being!
Frequently Asked Questions (FAQs)
Q: What other documents should I be collecting for my tax return?
A: While not required, having your previous year’s tax return on hand can be helpful for comparing with your current tax year and ensuring you haven’t missed anything.
Q: Do I need to provide 401(k) information for my taxes?
A: If you have a 401(k) account through a current or previous employer, you’ll need that documentation when filing your tax return. Contributions are deductible, and distributions are taxable, so it’s important to report this information accurately. Your W-2 form will include 401(k)-related tax information in Box 12, but it’s recommended to compare it with your year-end 401(k) statement.
Q: Should I report my Roth IRA on my tax return?
A: While you don’t have to report Roth IRA contributions on your tax return, it’s crucial to keep proper documentation of your contributions for future reference. You must have had a Roth IRA open for at least five years before taking tax-free withdrawals. Keeping track of your contributions ensures you know the amount you can withdraw without any tax implications.
Remember, staying organized and gathering the necessary documents in advance will make the tax-filing process smoother and more efficient. Happy tax season!
Note: The original article contains additional information about tax-filing software options. However, as per the brand focus guidelines, this information has been omitted.