No one enjoys having to think about taxes, but the more prepared you are, the less painful the process will be.
The best thing for you to do is to put together a tax prep checklist a few days before you’re ready to start the filing process. But what documents are needed to file taxes? Do you really need an accountant, or can you handle them on your own?
Read on to learn more about the documents needed for taxes and how you can make filing less of a nightmare this year.
Your Income Records
In order to file the most accurate taxes possible, you need to know how much money you earned within the past year.
If you’re employed by someone else, you’ll be provided with a W-2 form from your employer by January 31 of each year.
If you’re self-employed, you’ll need to fill out a 1099 form. If you’re a contractor, you’ll need the 1099-MISC form. If you have investment earnings, file a 1099-DIV form or a 1099-B form for any transactions your broker completed.
You can look at past paystubs, direct deposits, and other forms of electronic payments to help you to better determine your total taxable income.
Click here to learn more about what a paystub looks like, or how to generate them for your business.
Personal Data for Your Tax Prep Checklist
Part of tax prep is getting your personal information together.
You’ll need to have a copy of the federal and state taxes you paid the previous year.
You should also have your social security number at the ready, as well as the social security numbers of your spouse and any dependents in your household.
The most important documents for taxes are the ones that help you to reduce the amount you owe by lowering your overall amount of taxable income.
You must provide proper documentation, and hold onto it for several years after in the event of an audit.
Common deductions include:
- Charitable contributions
- Local income and sales taxes
- Classroom expenses for educators
- Mortgage interest/property taxes
- Medical fees/bils
- Tuition, student loan interest, and other educational costs
- IRA/self-employed retirement account contributions
Any Tax Credits You Have
The last section on our tax prep checklist is dedicated to credits that let you take cdollor-for-dollar tax cuts.
They may include any retirement contributions credits from a 401(k) or an IRA. You may also be eligible for up an up to $2,000 tax credit per dependent. You can also file Form 1098-T to claim any education cuts.
Need More Help with Filing Taxes?
Now that you’ve been provided with this helpful tax prep checklist, you can begin the process of filing your taxes.
If your earnings are especially complicated, we do suggest that you hire a personal accountant.
Need more help with understanding how to take advantage of potential tax credits and deductions? We’ve got you covered.
Keep checking back in with our blog for tips on ways to save even more.