E-filing has been around for some time now, and though it has made work easier, it does not do it all. Whether you use Free File, tax software or choose to seek professional help in tax filing, you definitely have some pre-filling preparation to do. The first step is to collect all your tax documents, which include the following:
- The previous year’s Federal tax return
- Social Security numbers for yourself and all your dependents, including your spouse’s.
- W-2 statements for salaries, tips, wages and even pensions, collectible at the end of January from all employers.
- The PIN (personal identification number) you used for e-filing the previous year or your AGI (adjusted gross income) for identity verification.
- 1099s for state tax refunds, dividends, interests, retirement plan distributions and other payments. Unfortunately, the 1099 issuers also have till the end of January to give them out.
- 1098s for the interest paid on mortgage, though just like the W-2s, they come late and may require you to wait. But you can use your closing statement if you bought your house the year before.
- K-1s from estates, trusts, partnerships, and S corporations.
In case you itemize deductions, you will certainly need receipts and records for the following in order to fill Schedule A:
- All taxes you paid, like real estate taxes, state taxes, local income taxes, and personal property taxes.
- General medical and dental expenses, including everything from drugs, hospital bills, to dental care costs, plus the medical insurance premiums, so long as they are not covered by your employer in pre-tax payments.
- All charity contributions, be it as cash, other assets or credit cards.
- Work-related costs, inclusive of money spent looking for a new job.
- Theft and possible casualty losses.
- Investment-related expenses and even gambling losses.
For small business owners, these are the documentation and receipts needed to fill Schedule C:
- Income statements
- Health insurance payments (self-employed of course)
- Size of home and the size of space occupied by a home office (if it’s a home business)
- Clear details on the business usage of your car.
- Self-employed pension plan contributions.
Additionally, you need to give answers for certain questions whether you choose to hire a tax professional or if you do the filing alone. For instance, did your marital status change in the last year? Or, are you supporting anyone else who is not living with you? These are some of the pertinent questions one needs to know.