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Checklist for Tax Preparation: What Important Documents to Gather Before Tax Filing

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Prepare these documents ahead of time to save time and money when it comes time to file your taxes.

You will need particular information and evidence to file your tax return, whether you hire a professional or do it yourself. Here’s a checklist for preparing taxes that most people will need to complete the task.

information about you

Let’s begin with the most apparent documents on any tax preparation checklist.

  • Taxes From the Previous Year. 

Your federal and, if applicable, state tax returns. These aren’t legally necessary, but they’re helpful reminders of what you filed and the documents you used last year.

  • Social Security or Tax Identification Numbers. 

Prepare these ID numbers for yourself, your spouse, and all dependents. Remember that dependents can include elderly parents and others in addition to children. 

  • IP PIN. 

If the IRS has provided you, your spouse, or a dependent with an identity protection PIN, you’ll most certainly need to have this accessible as well. 

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Collect all the documentation proving the money you received the previous year.

  • Forms W-2.

 Employers must provide or mail your W-2 by January 31, so keep a watch on your physical and electronic mailboxes.

  • 1099 Forms. 

1099s are informational documents that detail any extra income you received during the year. There are numerous sorts of 1099 forms, each ending with a different suffix based on the type of payment received. 

Form 1099-NEC, for example, is used for contract work. If you are paid through a third party, such as PayPal or Amazon, you will most likely receive a 1099-K. 

Investment earnings are reported on Forms 1099-INT for interest, Forms 1099-DIV for dividends, and Forms 1099-B for broker-handled transactions. These should arrive between January 31 and mid-February.

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Deductions reduce your taxable income, resulting in a lower tax bill. Documentation is the key to getting deductions. Not only will it protect you if you are ever audited, but it will also help you remember what to claim, lowering your tax burden. 

Norm Blatner, a CPA with Blatner & Mineo in Buffalo, New York, says that gathering those data may take effort, but it can pay off.

“So, let’s say your tax refund is $150 to $200 more.” 

Was it worth working an extra hour or two for $150 or $200?” he wonders.

Some deductions may not require that you itemize. These are directly listed on Form 1040. If you itemize your expenses on Schedule A, you will be able to claim more deductions.

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Here’s a list of some popular tax breaks. Before you file, make sure you have the following documentation:

  • Contributions to Retirement Accounts. 

Contributions to a traditional IRA or retirement account for self-employed are tax deductible. Just be mindful of the contribution restrictions.

  • Educational Costs. 

Students can deduct tuition and fees they pay, as well as interest paid on student loans. The IRS will not accept your deduction claim unless you provide Form 1098-T, which details your educational transactions. Form 1098-E contains information about your student loan.

  • Medical Expenses. 

Most taxpayers can only save on taxes if their medical costs exceed 7.5% of their adjusted gross income.

  • Real Estate Taxes and Mortgage Interest. 

If you have a sum escrowed for property taxes in your mortgage payment, it will be reflected on the Form 1098 your lender provides you. This form will also reveal how much interest on a house loan you can claim on Schedule A.

  • Charitable Contributions. 

Keep your donation receipts so that your good deeds will be rewarded when it’s time to pay your taxes. If you do not have verification, the IRS may deny your claim.

  • The cost of the classroom. 

You can deduct up to $300 in classroom materials if you are a teacher or other qualified educator.

  • Local and state taxes. 

Other taxes, such as state and local income taxes or sales taxes (up to $10,000, including property taxes), can be deducted. You do not need receipts for sales tax. The IRS has tables with the average amounts you can claim. 

However, the tax on a large purchase can be added to the table amount, so save those receipts.

State income taxes paid should be included on your W-2, but remember to include any state-estimated taxes paid during the year.

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Tax credits, the more valuable cousins of deductions, are next on the tax preparation checklist: They offer dollar-for-dollar reductions in any taxes you owe. However, just like with deductions, you must provide evidence to claim them. Here are a few examples of well-known tax Credits:

  • Credits for American Opportunity and Lifelong Learning. 

These educational credits can save you a lot of money. Form 1098-T and the tuition and fees deduction are necessary to claim either.

  • The Child Tax Credit. 

For tax year 2023, the regular child tax credit is worth up to $2,000 per child. You may be entitled to additional tax credits if you add to your family through adoption.

  • The credit for retirement savings contributions (also called the saver’s credit)

 Contributions to a 401(k), an equivalent employer-sponsored plan, or an IRA may be eligible for this credit.

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Most of us have income taxes deducted from our paychecks to fulfill our tax liabilities; the amount is shown on our W-2 forms. However, if you made anticipated federal tax payments during the year, keep this sum also available.

This tax prep checklist addresses difficulties that most filers face, yet taxes are unique to each of us. Prepare to modify the tax preparation checklist to fit your own scenario. Do you need assistance getting started? Countick’s skilled team of experts is willing to help you on your journey.

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