Tax season always comes faster than one plans for and this period causes many unprepared taxpayers confusion. Preparing for your annual taxes can be a hectic process. For this reason, many taxpayers forgo tax-saving opportunities and tax benefits, as they do not dedicate much time to their taxes. However, this does not need to be the case. Proper preparation for the tax season can enable you to have an easy tax season and also get you some tax savings. To be better prepared for the season, one needs to get all the documentation necessary to file returns ready. This way, tax preparation becomes an easy process and will even take a much shorter time. Below is a checklist of these tax-return documentations:
- Previous Tax Return – One of the important documentations that you will need to ease the process of preparing your taxes is your previous year’s return. Every time you file a return, ensure that you take a copy and place it in a designated tax file, folder, portfolio, etc. Such previous returns help you as you input the various details of your future returns.
- W-2 Form – Another important tax document are W-2 Forms. The W-2 Form is given to employees by their employer. The form indicates the wages paid out and any taxes withheld. With this form, you can easily compute the income entry on Line 7 of the Tax Return Form 1040 and also, entries to input for withheld taxes on Line 61.
- Tax Return Forms – You also need to have the various tax return forms to prepare your taxes. The forms include the main Form 1040, Forms 1099-INT and 1099-DIV for any dividends or interests that you may have earned from your investments, Forms 1099 MISC for any miscellaneous incomes (such as earned self-employment income, royalties and rental incomes), Forms 1099-R for retirement related contributions, tax relief forms (such as the Form 1098-E, Form 8863 and Form 8917 for any educational credit claims), and Form 8829 for home office deductions.
- Documentation for Deductible Expenses – You will also need documentation for your tax deductions. Some deductions are above-the-line while others only come to play if you are itemizing your deductions. Above-the-line deductions include Health Saving Account contributions, student loan interests, alimony, moving expenses, and qualifying retirement contributions. Itemized deductions include donations, qualifying travel expenses, and medical expenses.
- Personal Accounts for Self Employed – If you are in self-employment, you will need your business accounts or a schedule of your incomes to help you prepare your taxes. You will also need a schedule of your business expenses so as to pick out the qualifying expenses for tax deductions.