Your Mid-Year Personal Tax Checkup

It’s never too early to start thinking about and organizing for 2017 taxes, even if you haven’t filed for 2016 yet. Here are some tips to help you have the easiest tax year ever.

Medical and dental expenses. Amounts you pay for medical and dental expenses are deductible, including any amounts you put on a credit card. Now would be a great time to start gathering that information into one spot, like an Excel spreadsheet. If you really want to make your tax preparer happy (even if it’s you), categorize them by 1) prescriptions, 2) doctors and dentists, 3) labwork and radiology, 4) hospitals and other facilities, and 5) medical devices such as eyeglasses, hearing aids, wheelchairs, and crutches. Also, if you have a health insurance policy that is not through your employer, the premiums paid are deductible too. Don’t forget to include them. Click HERE for a more comprehensive list of qualifying medical expenses.

Charitable deductions. Have you donated this year? If so, you might have received a confirmation letter from the organization acknowledging the donation. Keep the original or a scanned copy in your tax file. Many charities wait until the end of the year to distribute these letters so there is a chance you might not have one yet. Remember that a canceled check is not adequate evidence anymore. A written confirmation from the donee is required. For noncash donations, ensure that you list out all items donated, estimated value, and date of the donation. If you are going to report more than $500 worth of item donations, you will need this information to complete Form 8283 that accompanies your personal return.

Documentation for dependents. If you are planning on hiring a tax preparer, get ready to provide proof that your dependents live with you or that you have the right to claim them. Due diligence requirements are in place where preparers must now request documentation of that proof, particularly if the Earned Income Tax Credit will be taken. Examples include report cards from school or medical bills…anything that shows the dependent’s name and your address. If you have joint custody and the other parent’s address is on most records, a copy of your divorce decree should be sufficient evidence.

Unfiled returns. If you haven’t filed tax returns for prior years, now is the time to catch up, especially if you’re planning on hiring a tax preparer. This time of year is perfect since it’s not the “busy season” and the preparer will, more than likely, have more time.