Tax season is here, and with it often comes at least some confusion and stress. The best way to combat the stress is with proper tax preparation. To reduce the chance of you arriving at your tax preparer’s office or accountant’s office without some crucial document or information, we suggest that you start gathering the following information as soon as you can.
Documents proving your income
In January and February, you will begin receiving a number of tax forms from individuals and entities from whom you have received income over the past year. These may include:
- Forms W-2 for income from wages and salaries
- Forms 1099 for income from other sources (e.g., interest and dividends, rental property income, self-employment income, retirement savings plans, social security benefits, distributions from health savings accounts, original issue discount for bonds, etc.)
- Schedules K-1 for income received from S corporations, partnerships, estates, or trusts
If you did not receive a tax form for certain income received during the year, this does not absolve you from your tax obligations regarding that income. For example, payments from overseas accounts and investments do not necessarily generate a U.S. tax form, but must be reported. For U.S. income, note that even if you did not meet the $600 threshold for receipt of a 1099-MISC for self-employment income, you are still required to report and pay taxes on all amounts received.
Documents proving your expenses
The new tax law is eliminating many personal expense deductions, but this doesn’t apply to your 2017 tax return so while you still can, be sure to itemize as many expenses as possible. Even if you usually claim the standard deduction, it is generally a good idea to compare it to the total of your itemized deductions to make sure that you are getting the bigger write-off.
Your accountant may provide you with a tax organizer that should include a checklist of deductible expenses, including but not limited to the following:
- Business expenses (see our next post on gathering documents for your business tax return)
- Childcare expenses
- Medical expenses
- Rental expenses
- Real estate tax bills (for personal residence, vacation homes, and rental properties)
- Paperwork relating to real estate that you purchased or sold in 2017 (including purchase or sale price and expenses related to that purchase or sale)
- Income and expenses connected to rental property
- Personal property tax payments (e.g., car registration)
- Charitable contributions (for donations of $250 or more, bring your receipt or acknowledgment letter verifying that the organization is a qualified 501(c)(3) and/or religious institution)
- A report of all realized gains and losses from investments sold during the tax year
- Moving expenses
- Form 1098 for any student loan interest, mortgage payments, or higher education tuition you paid during the year.
Make certain that you are prepared to present documents or at least an accounting of deductible payments made. This should include the payee, category (e.g., type of rental expense), and the exact dollar amount.
Extra stuff to bring if you have a new accountant
If you are meeting with a new accountant this tax season, be sure to bring last year’s tax return with you as well as personal information such as your social security card and social security numbers of any dependents that did not appear on your last tax return. If you changed your address since your last tax filing, be sure to bring documentation for that as well.
Have a business? See our next post on what other records to bring to the meeting with your accountant. The attorneys and accountants at Moskowitz LLP have decades of experience with tax preparation issues of all complexities. Drop us a line or call us today, and we’d be glad to help!