5 Tips to Help You Prepare to File Your Tax Return

Tax Preparation Checklist

  • Review your prior year return and document any changes in filing status for the current year.
  • Gather documentation for life event changes such as marriage, divorce or the birth of a child.
  • Ensure you have the correct documentation on hand to claim any qualified dependents such as elderly parents living in the home or a child who did not live in the home for at least 6 months.
  • Gather all required W2’s, 1099’s and other IRS Income Forms to document income and benefits sources from full-time jobs, part-time gigs and other benefits you may receive.
  • Be sure you are taking all “Above the Line” deductions and tax credits available to you.

Every year Uncle Sam requires you to file a Federal Tax Return. In addition, many states also require residents to file a State Tax Return. While you may hate the thought of completing paperwork and navigating complex IRS rules, you look forward to the tax refund at the end of the process.

A little advanced planning can not only take the dread out of filing taxes but can also leave more money in your pocket. The trick is to gather the appropriate documentation ahead of time. Whether you intend to file your taxes yourself, or seek the services of a tax filing professional, be sure to complete this short tax filing checklist to ensure the process goes smoothly and you maximize your tax refund.

Important Personal Information Needed to File Your Income Tax Return

Tip #1: Review Last Year’s Return and Make a Checklist of Any Changes for the Current Year

Collect last year’s tax return to serve as a reference for this year’s tax preparation. Make a short checklist of any changes affecting your tax filing status. For example, a change in employment, family size, a major life event like a marriage, divorce or death of a spouse or a move could all impact your final filing status and tax obligation.

Tip #2: Gather All Personal Information and Document Any Major Life Events

Aside from needing a valid ID such as a driver’s license and social security number, your circumstances may require additional records. For instance, a move, name change, family addition, death of a dependent, or other event can require supplemental documents and/or additional form filings to document the event. These additional forms can impact the cost of tax preparation and dramatically change the outcome of your tax refund depending on the situation.

Tip #3: Verify You Have All Legal Documents Needed to Defend Any Deductions You Claim

Claiming a child requires a social security number and birthdate. There are also times you might qualify to claim additional dependents, provided you have the appropriate documents. Such cases might include a new child in the family, taking care of elderly parents, or claiming a child who did not live with you more than half the year.

You might need a birth certificate or adoption paperwork to add a new dependent. Divorced couples claiming a non-custodial child must complete form 8332, and an adult child might qualify to claim an elderly parent even if they do not live with you. To make the tax preparation and filing process as efficient as possible, research the required documents needed to document the deduction you intend to claim and make sure you have the supporting materials, such as a certified copy of a birth or death certificate, should you need to defend yourself in a tax audit.

Tip #4: Avoid an Audit by Including All Required Forms for Various Income or Benefits

  • Employer Income: Salaried and hourly workers receive a W-2 to document income. Employers must mail the forms by January 31.
  • Contract Income: Earning above $600 from a single company for freelance work, side gigs, or other earnings will require a 1099-Misc.
  • Investment Income: Interest income, profits from a stock sale, IRA distributions, annuity payouts, or earnings from the sale of real estate can all result in 1099 income.
  • Other Income: You could also receive income from social security, disability, unemployment, gambling, or a host of irregular sources.

 

When a company or individual sends you a W-2 or 1099, they also forward a copy to the IRS. Be sure to review all sources of income or benefits you received in the past year and ensure you include the corresponding IRS form with your tax return. Forgetting to claim W-2 or 1099 income almost always results in an audit.

UPDATED: List of IRS Tax Forms by Type of Income

  • Form W-2 (wage and salary income from full-time employment)
  • Form W-2G (income from gambling winnings)
  • Form 1099-A (proceeds from the full or partial satisfaction of a debt from foreclosure)
  • Form 1099-B (income from the sales of stock, bonds, or other investments)
  • Form 1099-C (income from the settlement or cancellation debts)
  • Form 1099-DIV (income from dividends)
  • Form 1099-G (income from state tax refunds or unemployment benefits compensation)
  • Form 1099-INT (income from interest earned)
  • Form 1099-K (business or rental income)
  • Form 1099-LTC (benefits received from a long-term care insurance policy)
  • Form 1099-MISC (self-employment income and other miscellaneous income)
  • Form 1099-OID (income resulting from the original issue discount on investment bonds)
  • Form 1099-PATR (income received from patronage dividends)
  • Form 1099-Q (distributions from a 529 education savings plan)
  • Form 1099-QA (distributions from a 529 ABLE account to pay for qualified care for the disabled)
  • Form 1099-R (distributions from qualified retirement savings plans like a 401K or IRA)
  • Form 1099-S (proceeds from the sale of a home or other real estate)
  • Form 1099-SA (distributions from a qualified health savings accounts)
  • Form SSA-1099 (income from Social Security benefits)
  • Form SSA-1042S (income from social security benefits paid to a non-resident alien)
  • Form RRB-1099 (Proceeds from Railroad Retirement Benefits)
  • Schedule K-1 (income from estates, trusts, partnerships or Sub Chapter S corporations)

Tip #5: Be Sure to Claim All Deductions Available to You

Qualifying for tax credits and deductions may require you to maintain records along with receipts. Be sure you can sufficiently document any deductions you claim. Now is a good time to make copies of travel records, calendars or invoices and save any communications, written or electronic, that may help to document your deductions.

Deductions come in two forms, above-the-line, and itemized deductions.

  • Above the Line Tax Deductions: All qualified taxpayers can take above-the-line deductions, which lower your AGI and could impact qualifications for other deductions and tax credits. A few of the deductible items include half of the self-employment tax, health insurance premiums for the self-employed, educator expenses, student loan interest, health care savings account deposits, and qualified retirement contributions.
  • Itemized Tax Deductions: Itemized deductions only apply to those with qualified expenses greater than the standard deduction. After the 2017 JOBS act doubled the standard deduction, fewer people meet the threshold to warrant itemizing.
  • Tax Credits: You qualify for some tax credits through events such as claiming dependent children or earned income below IRS thresholds. Others requiring documentation include qualified home improvements or educational credits.

Final Thoughts

Complex IRS rules leave thousands of taxpayers forfeiting tax benefits. With a little advanced preparation, and some guidance form a qualified tax professional, you can capitalize on all the deductions and tax credits you qualify for, lowering your tax bill and potentially increasing your refund.

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