4 Tips to Get You Organized for the Coming Tax Season

Tax documents organized in hanging foldersThe holidays are over, and that means a new season is quickly approaching—tax season. As we approach the middle of January, most taxpayers are beginning to receive their first few necessary tax forms. Instead of stacking those forms on your desk or stashing them in an envelope for later, why not take a more organized approach this year? This blog will give you a few tips on getting organized for the coming tax season, so when it’s time to meet with your CPA, you’ll have every form, receipt, and bit of financial data ready.

Know the Income Tax Forms You Need

There are countless IRS tax forms out there, and they’re subject to change all the time. But the important thing for you to know is which ones you will need to file your tax return. Everyone’s financial situation is different, and so the forms you need will be different from someone else’s. However, here’s a list of some of the most common types of income tax forms and what they’re used for.

  • W-2 for employees who earn a wage or salary
  • 1099-G for individuals receiving unemployment benefits
  • 1099-Misc for freelance workers (you should get one of these from each client)
  • 1099-R for annuity income, pension, and IRA
  • 1099-Div for earned dividends
  • 1099-B or 1099-S for income from the sale of property or stocks
  • W-2G for gambling winnings

Make a list now of all of your sources of income and which forms you will need for each income source. This will make it much easier for you to know when you have received all necessary forms, so that you’re not left shorthanded when you meet with your tax preparer.

Know Your Deductions

Deductions, like income sources, vary greatly from one taxpayer to another. For some, it’s as simple as reporting a single, large donation amount to a favorite charity. For others, it involves lengthy lists of expenses, donations, and more. Here are a few deductions that you may need to add to your list, and the documents you’ll need to support those deductions:

  • If you’re self-employed, you’ll want to deduct any expenses associated with your business. Make sure you have proof of those expenses, including receipts and credit card or bank statements.
  • If you own rental properties, you’ll likely have expenses associated with upkeep. Have these receipts and statements available as well.
  • Most people can deduct at least a portion of their real estate and property taxes. Find a copy of these records for when you file your return.
  • The majority of people give to charity in some way during the year. Find records for any donations you’ve made, whether it was in the form of funds, non-cash items, or mileage driven. If you don’t have a receipt from the charity stating what you donated, write up a detailed personal record that shows the date, type of donation, and the approximate value.
  • If you made any contributions towards your retirement accounts this year, get copies of those accounts’ statements.

There are many more potential deductions, so it’s important that you go through your financial situation in detail with your CPA to ensure that you’re receiving every possible deduction, whether it be educational expenses or childcare expenses. Once you know each deduction that you qualify for, you can make up a list of the necessary documents to claim it.

Digitize Your Receipts

As you may have noticed, properly organizing documents for your tax return (especially if you have a significant number of deductions that you want to itemize) requires a great deal of receipts and account statements. Rather than trying to corral all of those documents into a single folder, consider digitizing them.

You don’t need anything special or technologically advanced to do this. Simply taking a picture of your receipts and putting them in an appropriately labeled folder on a cloud-based storage system is sufficient. Then, you can simply share this file with your CPA when it’s time to file.

Have All Personal Information Ready

Finally, you’ll need to have certain personal information for yourself and all dependents available for your CPA. Have their SSNs or TINs written down, along with their dates of birth so you can provide this data when it’s needed. You will also need to bring your own Social Security card and an unexpired driver’s license to your meeting with your CPA.

If you’re ever in doubt about what documents you need, reach out to one of our tax preparer’s before your appointment. We’ll go over your financial situation with you and let you know what documents you’ll need to bring.