Tax Season is Around the Corner!
Will you be prepared?
The IRS will begin accepting tax returns electronically on January 19, 2017. Paper tax returns will begin processing at the same time. Will you be ready?
“Nothing in life is to be feared, it is only to be understood. Now is the time to understand more, so that we may fear less.” -Marie Curie*
Plan now for the approaching tax season. It is upon us!
Review the prior year tax return to glean details on the statements you should expect to receive and any information you need to gather.
Create a file, basket or corner...whatever works best...for your tax documents that arrive in the mail and any tax information that you gather. It is best to have these items in a central location.
Organize, organize, organize...this is the key to success. This will reduce your time if you prepare your own tax return. If you have a tax accountant, this will help your tax return to be prepared in a shorter amount of time and more accurately.
Schedule the appointment with your tax accountant early in the season for a time when you expect to have all documentation ready to go.
Key Items to Gather for Tax Prep:
Form W-2: Wage and Earnings Statements - Each employer will issue a statement by January 31st. If you have moved, you should contact the employer and give them your updated mailing address. If you misplace or do not receive the form, contact the employer.
1099-B: Proceeds From Broker and Barter Exchange Transactions -Brokers or mutual fund companies must file this form when you sell stock. It shows the amount and date of the sale, and provides cost basis information.
1099-DIV: Dividends and Distributions - This form must be filed if you own stock or other securities and receive over $10 in distributions, such as dividends, capital gain distributions, or nontaxable distributions, that were paid on stock and liquidation distributions.
1099-G: Certain Government Payments - This form is used to report unemployment compensation, state and local income tax refunds, agricultural payments, and taxable grants.
1099-INT: Interest Income - Financial institutions are required to file this form if they pay you more than $10 in interest during the year
1099-K: Merchant Card and Third Party Network Payments - This form must be filed if you have a business and have at least 200 transactions and at least $20,000 in sales during the year that are processed by third-party payment processors such as PayPal and Google Checkout. This form is also issued as by credit card payment processors.
1099-MISC: Miscellaneous Income - This form must be filed by a client who pays an independent contractor at least $600 for professional services during the year.
1099-R: Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts - This is the form filed when you get a distribution from a retirement plan, such as an IRS, Roth IRA, 401(k) plan.
Schedule K-1: These forms arrive in March, typically. They are derived from S-Corporation to stockholders, Partnership members, Trust/Estate beneficiaries.
Childcare Information: Name, address, EIN or SSN of the provider and the expense amount.
Medical expenses: 10% (7.5% if age 65 and older) of the adjusted gross income. Don't forget the medical mileage - it counts @24.0 cents per mile!
Charitable contributions: Receipts are required for all charitable contributions. Charitable mileage rate is 14.0 cents per mile.
Employee business expenses: Union dues, uniforms...etc.
Mortgage interest, PMI and Property tax
Form 1095-A: Health Insurance Marketplace Statement or the Certificate of exemption: These are new requirements for the Affordable Care Act.
Other common items needed are stock sales, real estate sales, business expense/income records and rental property expense/income records.
You can never be too prepared. Take some time over the next few weeks to get organized and remove some of the stress and worry out of tax season.
*Marie Curie quotes (French Physicist, twice winner of the Nobel Prize, 1867-1934) www.thinkexist.com
**How Many 1099 Forms Are There? by Stephen Fishman, J.D. NOLO Law for All http://www.nolo.com/legal-encyclopedia/how-many-1099-forms-are-there.html
If you have questions, please call our office or schedule an appointment.
This blog is not meant to offer legal or comprehensive advice. You should contact our office for questions regarding your unique situation.