It's that time of year to start pulling together your information to get your taxes done. Even though the federal government is still shutdown, the due date for tax returns have not changed. Check out my post the Federal government shutdown. Keep in mind the states are still working as normal.
I frequently get asked what you need to bring to get your taxes done. Everyone's list is unique, but here is a general list of information that a tax preparer will need to prepare your returns. Many times you drop off your information and once the tax preparer gets into the nitty gritty of your information, they may ask questions and request some more information.
1) Prior year return - If you are taking your return to a new tax preparer, bring a copy of your prior year return. This is needed for multiple reasons.
First, it gives the tax preparer all of your basic information such as name, address, Social Security Numbers, dependents, prior year income items.
Second, items like prior year Adjusted Gross Income, education credits, overpayments credited to next year are needed to prepare the current year's return.
Third, this will give the tax preparer information needed for a comparison for the current year return. Tax preparers will make sure that income per line is similar to last year. If there is a major difference, the tax preparer will have take additional time to determine if the difference makes sense. For example, if in 2017 you worked as an employee, but in 2018 you retire. The tax preparer will notice that the wage line is zero and ask the question "Does this make sense?"
2) Current Driver's License or other form of ID - The IRS requires tax returns that are prepared via computer to be e-filed. To e-file a return, the tax preparer is required to enter your and your spouse driver's license information to submit your tax return to the IRS.
3) Everyone's Date of Birth - Many tax issues are based in age. Make sure that you know your, your spouse's and your dependent's birthdays. These dates are not listed anywhere on a tax return.
4) Income Reporting Documents - Forms like Form W-2 for wages from your employer, Form 1099-INT for interest earned of at least $10 from your bank, Form 1099-DIV for Dividends earned from stocks, Form 1099-MISC for independent contractor or rental income. Schedule K-1's is your share of income from a partnership, LLC or S Corporation. These are all imperative for preparing your income tax return. These amounts are reported to the IRS and the amounts must match what is reported on your tax return.
5) Financial Statements for Self-Employment or Rental property - If you are self-employed or you have rental property, you can decrease your income for expenses that relate to that venture. If you track your business through QuickBooks, send an accountants copy of the file to the tax preparer. If you have a shoe box of receipts, organize the receipts and total them for the tax preparer to reduce your preparation fees. If this is the first year that the tax preparer is doing your return, make sure that you have a copy of the depreciation schedules from the prior year.
6) Adjustments to Income - Have a list of amounts paid for Individual Retirement Account (IRA) contributions, health insurance premiums for self-employed taxpayers and their family, educator expenses, and student loan interest.
7) Itemized deductions documentation - Things like medical expenses, property tax, mortgage interest and charitable contributions could be deductible if they are more than the standard deduction (Single $12,000 or Married Filing Joint $24,000). Have those amounts summarized for your tax preparer. For charitable contributions, you will need letters from the charity confirming the contribution. You should bring copies of these letters with you. Miscellaneous itemized deductions such as investment management fees, employee business expenses, and tax preparation fees are no longer deductible. Save yourself some time and do not summarize these amounts.
8) Education Expense Information - If you, your spouse, or dependents have gone for higher education in 2018, your college should provide you with a Form 1098-E that reports the amount of payments and expenses that qualify for the various tax credits that are available.
9) Health Insurance Documents - If you got your health insurance from the marketplace, you will need to bring with your Form 1095-A, Health Insurance Marketplace Statement. The information from this form is required to calculate an additional tax or credit that may be due to you.
10) Estimated Tax Payments - Your tax preparer will need to know what estimated tax payments that you made throughout the year. They will need to know the date and the amount made by jurisdiction. This will help them eliminate any penalties and interest that maybe assessed.
11) Tax Notices Received - Roundup any notices that you have received during the year that you have not sent over to your tax preparer. Typically, it is best for you to send these over to your tax preparer as they come. Usually, these notices should not be ignored. Changes to your tax returns should be reviewed and handled quickly.
This is not an exhaustive list of what your tax preparer will need to prepare your return, but it will give them enough information to start your return.
Contact me at barb@calc-you-later.com if you have any questions.
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