Tax time: everyone’s favorite time of year! Ok, maybe not – but we hope our recent tax blogs have eased the anxiety a little. As a reminder, we’ve covered general tips for filing in 2017 as well as tips for small businesses, including the Section 179 deduction, cost segregation for landlords, charitable donation deductions, and other deduction options. We also gave you some advice that you can follow all year to be ready for tax season in 2018.
Here are several more tax tips to make tax season even more bearable:
Utilize the Past
Review your 2015 return; if you didn’t make any significant financial changes in 2016, chances are you’ll need the same forms and documentation. (You kept that information, right?)
Now check the deductions on your 2015 tax return – do any of them still apply in 2016? Mortgage and student loan interest? Charitable contributions of goods or cash? Business losses? College tuition? Medical bills? Gather the records for these.
What about 2016? Did you do something that might qualify you for other deductions, such as buying a new hybrid car? Send a child to college? Add these documents to the stack.
Collect the documentation you need ahead of time – all information regarding income, including W-2 forms from employers, 1099-INT and 1099-DIV forms from investments, paid invoices from clients, and rental receipts from tenants and lessees.
Your goal is to have a piece of paper verifying every dollar that came into your control during the year. For example, if you cashed in any part of your retirement accounts, it may count as income on your taxes, always include records of such withdrawals. If you had tax payments withheld on liquidation or transfers of assets within your investment portfolio, make sure you have those documents too.
If you have Medicare, Medicaid, or get health insurance through your employment, you can skip this section. If, however, you’re one of the millions of Americans who had private health insurance and/or got your health insurance through the ACA in 2016, you need to gather the records that validate which plan you used and how much money you spent.
If you take the time to gather the supporting documents for your 2016 taxes before you even think about the actual preparation, you will save yourself a great deal of time and stress. These simple steps may not cover every single item you need–everyone’s taxes are different, after all–but they will give you and your tax preparer a solid baseline to start the preparation of your 2016 return.
For a CPA recommendation to handle your tax needs, or for other money matters, please contact Holdfast Wealth, and don’t forget – you have extra time to get your taxes filed this year; they aren’t due until April 18th!