The tax season is officially here. If you haven't already, now is the time to get prepared. Whether you meet with a tax professional or prepare your taxes yourself, proper planning helps the process go smoother and may reduce the risk of costly errors.
At Macaulay & Associates we do not prepare tax returns, but we do use your return to provide us with information relating to your overall financial plan. By analyzing the return, it helps us to identify possible opportunities for saving money through deferring income, maximizing deductions, and utilizing tax credits.
We encourage you to check out the tips below to help you tackle this tax season with confidence.
To-Do #1: Gather All of Your Forms
Beginning in January, you likely started to receive the forms you need to properly complete your tax return. If you are expecting a large return, you will want to make a list so you don't forget anything that could affect it. Once you have received your documents, first give them a scan to make sure they are correct and contact the sender if there are any discrepancies. Remember, even a simple misspelling can cause a flag with your tax return. Inspect them carefully.
Some of the forms you will need to watch out for include:
- W-2s from your job
- SSA-1099 for Social Security benefits
- 1099s for additional income, interest, gains and losses
- 1095-A for government marketplace health coverage
- 1098s for reporting interest and tuition payments
- W-2Gs for any gambling winnings
- Schedule K-1s for company ownership
To-Do #2: Round-Up Your Receipts
If you have your own business or plan on itemizing your deductions, you will need to record expenses so that you can take advantage of any available write-offs. Gather all the receipts for business expenses, medical expenses and other expenses that can be listed on your Schedule A or Schedule C. Receipts can be physical receipts or bank and credit card statements that show payments for these items. Once gathered, organize them by type, so they are easy to find when you begin filing.
To-Do #3: Acquire Records of All Charitable Contributions
Throughout the year, you may have made donations to a tax-exempt organization. These donations can provide you with a charitable contribution write-off. Traditionally, this could only be done if you chose to itemize your deduction. However, as of the CARES Act, filers who choose a standard deduction may be able eligible to write-off up to $300 in charitable contributions.1
Other donation types will still require an itemized deduction and documentation. And most organizations, from churches to fundraisers, can provide a record of your tax-deductible contributions.
To-Do #4: Create a List of All Personal Information
While you likely know your Social Security Number by heart, you will want to jot down the Social Security Numbers of any dependents you wish to claim, this way it is easy to access and you can be sure it’s accurate. Also, make a list of addresses for any property you own as well as dates when the property was bought or sold.
To-Do #5: Get a Copy of Last Year’s Tax Return
If you are using the same preparer as the previous year, they should have a copy of your tax return. If not, find your old copy and have it ready with your other tax items. Being able to reference your previous return can help you see what you filed last year, so you don't overlook something this year.
This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.