Monday, 16 March 2015

List Of Items To Remember For Taxes

Save preparation time by gathering the necessary information beforehand.


Though the required act of filling out income tax returns is likened to undergoing a root canal, being prepared can lessen the burden. Create a tax preparation checklist, then check it twice. Once you have compiled all the necessary items for getting taxes done, you are halfway home.


Income


Compile all statements received regarding income. This includes forms W-2, 1099 and pay stubs. You will also need information on commissions or tips you earned during the tax year. Form W-2 will state wages paid to you from an employer. Form 1099 will provide income amounts from interest on bank accounts, dividends paid on stocks or mutual funds, proceeds from the sale of stocks or securities, rents, royalties or non-employee compensation.


Deductions


Take the opportunity to claim any applicable deductions to adjust your taxable income figure. Information on deductions will come from a variety of sources. Gather bank statements, year-end statements from brokerage firms, retirement contribution information, tax payment figures and insurance premiums. If you own a home, compile statements from the mortgage company, as well as receipts for home improvements and property taxes paid. If you own rental property, you will need information on expenses incurred maintaining the property. Medical expenses are deductible if the annual threshold is met. Gather figures for doctor bills, hospital bills, lab work or any other items associated with medical expenses. You may also need mileage figures for trips to doctor offices and medical facilities. Payments made to educational institutions for a claimed dependent may be deductible, as well as contributions made to a college savings account. If you work from home, or incur expenses traveling for your job, compile receipts. These include rent or mortgage amounts, utility bills and expenses related to your vehicle.


Miscellaneous


Standard information is needed to complete an annual income tax return including legal name, Social Security number, current address and number of exemptions to claim. You will also need to refer to the prior year's tax return, so retrieve copies of both the federal and state return. Gather the birth dates and Social Security numbers of any dependents you will claim on your return.


Tips


Gathering information throughout the tax year will preclude the mad dash at tax deadline time. Purchase an accordion folder or other storage tool and file bills, check stubs, receipts and other relevant items either chronologically or alphabetically. If using the services of a tax preparer, ask him to provide a checklist of items he will need to prepare your taxes. Review prior year returns to help identify items and records you will need for the upcoming year. If storing information electronically, back up to a disc or flash drive on a regular basis to protect records in the event of a data loss or computer malfunction. The IRS suggests keeping all documentation regarding income tax returns for a period of seven years. You will need this information in the event of an audit.

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