If you’re part of the roughly 60% of Americans who pay someone else to prepare their tax return, then there’s a good chance that you’ve had to make more than one visit to the preparer’s office because you forgot something. Since preparing taxes happens only once a year, we’ve put together a checklist with five items to help you gather all the documents you need beforehand. A financial advisor can also help you optimize your tax strategy to reach investing and retirement goals.
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Depending on your filing status, your accountant will need different types of information to prepare your tax return. In addition, if you are self-employed or a full-time college student, this will also determine the types of forms that you will need to use. Here’s a breakdown of five types of documents you’ll need when filing your taxes.
Even if you’ll be returning to the same tax preparer you’ve used for years, it’s always wise to bring along some identification. This is especially important when you plan on requesting a refund anticipation loan (rapid refund), since preparers are required to keep a copy of your current ID on file.
It’s always a good idea to bring Social Security cards for yourself, your spouse and any dependents rather than trying to recite them from memory. A mistake of even a single digit will result in your return being rejected, and that can mean a delay in getting any refund you are entitled to.
In addition to Social Security cards, driver’s licenses or other federal IDs, those claiming a dependent might need to bring Form 8332 (which shows that a custodial parent releases the right to claim a child to you).
Your income tax return must reflect all of your income – not just most of it or what you remember. This is important because any income that doesn’t make it onto your return can result in penalties and interest for under-reported and underpaid taxes.
For tax purposes, income is any money you receive from any source that is not a gift. This includes social security, retirement benefits, sale of real estate, investments (including dividends), bank interest, alimony, gambling and, of course, wages. Income from your job, or jobs, will be reflected on W-2s. All other sources of income, such as money earned as an independent contractor, will be reported on a 1099 of one form or another.
Some often overlooked sources of income that you will need to have documentation for are:
Many people don’t itemize their returns and therefore fail to bring proof of expenses with them to the tax preparer. This is a bad practice, as any deductible expenses that you have that are greater than the standard deduction will reduce the amount of taxes you owe or increase the size of your refund. For the tax year 2023 (which you will file in early 2024), the standard deduction is $13,850 for individuals, $27,700 for married couples filing jointly and $20,800 for those filing as head of household. These deductions increase in 2024 to $14,600, $29,200 and $21,900.
Tax-deductible expenses that can lower your tax burden include:
Losses occur as a result of things like natural disasters, fire, theft and other unexpected catastrophes. Bring along proof of the event in the form of police or fire reports, insurance claims and other official documentation that spells out what occurred and when. If you’ve received partial payment in the form of insurance or federal or state disaster relief, bring that along as well.
There are two reasons you should bring blank checks along to your tax preparation appointment: if you owe, it’s a good idea to write the check right there and mail your payment in when you leave the office, and if you’ll be receiving a refund and would like it directly deposited into your bank account, you have the information on hand.
It pays to be prepared, even when you’re having someone else prepare your taxes for you. Make sure you provide your accountant with all of the necessary information. Be proactive about gathering your finances into one place, so that you won’t need to worry before the filing deadline. If you provide your accountant with everything they need, you should have a hassle-free tax season ahead of you.
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Frank AddessiBorn and raised in the center of the known universe, Brooklyn NY, and currently hiding out in the bucolic hills of northeast Pennsylvania writing about personal finance. His expertise includes personal loans, credit cards and retirement. It's not easy living the American Dream but someone has to do it!
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