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Time to tidy up your tax documents ...

Even though Mother Nature doesn’t seem to realize it, spring is here and that means it’s time to do some spring cleaning. Then again, with weathermen still mentioning snowflakes, perhaps you’d rather snuggle under a blanket and catch up on your favorite shows. Regardless of the weather, tax returns are due by April 17, so it’s time to gather your documents and have your return prepared. We have a handy checklist available here to help you with this task.

First on the checklist is the personal information needed for each individual listed on the tax return. While tax preparers are not required to see Social Security cards, it’s not a bad idea to provide them to ensure names and numbers on the return match what is in the database the IRS uses.

Second is anything related to income. With very few exceptions, the IRS expects taxpayers to report all worldwide income derived from any source. To help taxpayers keep track of their various sources of income, a wide variety of forms may be received. These include the familiar W-2 for job wages and various 1099 forms for retirement, investment, and self-employment income. Did you drive for Uber, rent your home through Airbnb, or sell jewelry or kitchen gadgets? Then you have income that should be reported.

The next category on our list relates to credits and deductions. Daycare expenses, moving expenses, costs associated with college, and student loan interest can potentially be deducted whether you itemize or not. Taxpayers who itemize instead of taking the standard deduction will need records relating to medical expenses, all taxes paid, mortgage interest, charity donations, unreimbursed job expenses, and investment expenses. A good resource for valuing goods donated to organizations such as Goodwill or The Salvation Army can be found here.

Taxpayers with rental property have additional documents to gather, including all forms reporting income. Make sure to provide details on all expenses associated with the rental units. Likewise, anyone who is self-employed should provide information on all income and related expenses. Some taxpayers who are new to side gigs such as consulting, direct selling, and other part-time activities are surprised to learn they are considered to be self-employed and thus owe self-employment (i.e. Social Security and Medicare) tax. The rules for reporting rental and self-employment income and expenses can get confusing very quickly, so contact us to discuss your unique situation.

Finally, it’s always a good idea to provide last year’s tax return since several types of information on it may impact the current year. Did you receive a state refund last year, owe a potential penalty for under-withholding this year, or have a capital loss carryover last year? These are just a few of the situations that can impact your current return, and the information needed is easily found on last year’s forms.

Whether you’re eager to dive into spring cleaning with a vengeance or want to savor a few more lazy evenings by the fire, it’s time to get your tax documents together in order to meet the April 17 filing deadline. Down South has convenient evening and weekend appointment times available, so call us now.


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