The year is almost over and it will soon be time to start
thinking about filing our personal tax returns. Here’s a quick checklist of
information and documents you’ll need to get it done. Keep in mind that
individual scenarios may vary and this list covers the most common items
individuals report on their tax returns. Your tax preparer will give you
additional guidance that is customized to your specific situation.
Forms Received in
the Mail. Starting as early as January, you will start receiving tax
documents in the mail and may continue to get them as late as April. February is
the most likely month you’ll receive them, however. Some of the more common
forms received are as follows:
W-2: Salaries and wages from employment
W-2G: Gambling winnings
SSA-1099: Social security benefits
1095-B: Health coverage
1098: Mortgage interest and property taxes paid
1098-E: Student loan interest paid
1099-DIV: Dividend income
1099-G: Government payments (e.g. unemployment
compensation, state income tax refunds)
1099-INT: Interest income
1099-MISC: Miscellaneous income (usually from contract
work)
1099-R: Distributions from retirement-type accounts
1099-S: Proceeds from real estate transactions (e.g. sale
of your home)
1099-SA: Distributions from a medical savings account
(e.g. HSA, MSA)
Medical and Dental
Expenses. Even if your medical and dental expenses are below the IRS
threshold where none of it is deductible, it may be deductible on your state
return. It’s worth your while to total up these expenses for the year.
Qualifying expenses may include doctor and dentist visits, radiology, lab work,
prescriptions, insurance premiums, and medical devices like crutches and
hearing aids. For a more comprehensive list of qualifying expenses, consult IRS
Publication 502 HERE.
Charitable
Contributions. Gifts to charity are deductible, but documentation is
required to substantiate the donation. Canceled checks or bank statements are
not sufficient proof. Most charitable organizations automatically mail out
letters to donors after year-end, summarizing their contributions for the year.
If you do not receive one, call the organization and request one.
Job Expenses.
If you pay for job-related expenses that are not reimbursed by your employer,
they are deductible on your return. This can include continuing education,
uniforms, travel meals, and mileage driven for business purposes. If you claim
mileage, you will have to maintain a mileage log to justify the deduction. For
a more comprehensive list of qualifying expenses, consult IRS Publication 529
HERE.
Expenses That Are
Not Deductible. It’s also important to know what types of expenses aren’t
deductible. That way, you’re not wasting time tracking something that will give
you no tax benefit. Non-deductible expenses include interest on credit cards or
other personal loans; political donations; vitamins and other personal care
products that don’t require a prescription; commuting mileage and costs; child
support payments; private school expenses; pet-related expenses; home repairs;
weight loss programs; and gym memberships.
Final Thoughts.
It’s better to have too much information gathered than not enough, especially
if you’re handing it off to a paid preparer. Keep all your documents in one
place. Also, consider storing forms and receipts electronically. It reduces the
paper floating around your home and increases portability. The IRS does accept
scanned documents as satisfactory evidence, so an original is not absolutely
necessary anymore. Finally, consider using a money management software like
Quicken or Mint to track all your personal finances. At year-end, you can
generate reports in minutes to obtain all the amounts you need to report on
your tax return and some even import directly into self-preparation software
like TurboTax.
