Everything you should be doing to prepare for tax season
- The next tax day is Monday, April 15, 2019.
- To prepare for tax season you'll want to gather some previously filed documents and obtain other documents you may need to file for tax returns.
- Start tracking your income and deductions as soon as possible.
The next tax day is April 15, 2019 and even though tax day is still a few months away, it's never too early to start getting everything you need to file in order. By the time it's time to file your taxes, you'll be ready to sit down with your tax preparer or input your data into an online program.
The process can seem a bit daunting so INSIDER consulted certified public accountant Krystal Standberry from LYFE Accounting in Atlanta, Georgia to create the ultimate checklist for preparing for tax season.
Here's how you can prepare for tax season.
Gather personal information and last year's information
Make sure you have your social security or tax ID card. You will also want to bring your unexpired driver's license, identification card, and passport to your appointment. This should also include your spouse's info, if applicable.
You'll also want to gather copies of last year's return for you and your spouse, if applicable.
Start gathering the paperwork for your dependents
If you're going to include dependents (children or elderly) on your tax return, these are the documents you will need to provide:
- Their social security and tax ID numbers
- Their dates of birth
- Childcare payment records (this includes the care provider's tax ID number)
- Adoption papers (if applicable)
- Form 8332 to show that a custodial parent is releasing their right to claim the child to you, the noncustodial parent (if applicable)
- Any alimony payments that have an ex-spouse's social security number
- Any death certificates
Start tracking your income
You may have various sources of income so here's what you'll need:
- Form W-2 for wages/salary, federal and state tax withholding, tips and earned income credit (Your employer should send this to you by January 31, 2019)
- Form 1099-G if you are unemployed and receiving unemployment benefits
- Form 1099-Misc for compensation from freelance work (You should receive a form from all of your clients)
- Form 1099-R for annuity income, IRA and pension
- Form 1099-Div for those who have earned dividends
- Form 1099-B, 1099-S for income from sales of property and stock
- Form W-2G for any income from gambling
- Any other income from prizes and awards (like lottery winnings), jury duty pay, alimony, or rentals
A comprehensive list of income-related forms can be found on the IRS website.
Make note of any deductions that should be accounted for
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A tax deduction is basically a reduction in income which is subject to state and federal income taxes. In decreasing your total taxable income, this can reduce the amount of income tax you would have otherwise owed.
If you're going to itemize your deductions, you will need to provide records for each. Here are several potential deductions to look out for.
- Records of all expenses if self-employed, including credit card statements and receipts
- Records of expenses for rental homes
- Records of expenses related to investments
- Real estate and property tax records
- Charitable donations, including non-cash and mileage driven for charitable purposes
- Records of medical expenses, including payments made to doctors, dentists, clinics, or hospitals
- Insurance payments
- Childcare expenses, including daycare and babysitters
- Any scholarships or fellowships received
- Qualifying educational expenses
- Interest on student loans
- Job-related vehicle expenses
- Classroom expenses for K-12 educators
- Relocation expenses not covered by employer
- State and local taxes paid excluding withholding
- An invoice showing any sales tax paid on a vehicle
- Any contributions made towards retirement
- Expenses related to natural disaster losses, rebuilding, and repairs
Figure out if you're going to file a federal or state return
Have your financial information ready
If applicable, have your bank account number and routing number handy for a direct deposit of your refund into your account. This information can be found in your checkbook.
Take advantage of helpful resources
- The Internal Revenue Service (IRS) has a great tool called the Interactive Tax Assistant that can answer some of your questions before filing.
- The IRS has teamed up with private tax preparation companies like the Free File Alliance to offer Free File - a free and low-cost electronic filing service to those who earned less than $66,000 in 2018. Your information is protected from unauthorized use and will not be disclosed or used for any other purpose but tax preparation without your consent.
- The Volunteer Income Tax Assistance (VITA) program offers free tax assistance to individuals who earn less than $54,000 annually, speak limited English, or have disabilities. The volunteers are IRS-certified to aid with basic income tax preparation and electronic filing for those who qualify.
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