Though the 2012 filing season has passed, it’s never too early to start preparing for next year’s season. Pre-filing preparation is important in tax filing, whether you are using Free File, or using tax software on your own, or seeking professional filing help. The following is a guide on how to prepare tax files.
Start by rounding up all your tax documents like:
- The federal return from the previous year(s)
- The Personal Identification Number (PIN) you used in the previous year. The PIN or the Adjusted Gross Income (AGI) to verify your identity and submit your return electronically
- 1098s for mortgage interest paid. If you bought your house last year, get the closing statement
- W-2s for wages, salaries, tips, and pensions
- 1099s for interest, dividends, retirement plan distributions, unemployment and other payments, and state tax refunds
- Retirement plan contribution statements
- K-1s form partnerships, S corporations, estates, and trusts
- Your Social Security numbers and that of your spouse and all dependents
Next, have all receipts and records of deductions for the following:
- Taxes paid during that year. These include state and local income or sales taxes, real estate taxes, and property taxes
- Medical and dental expenses that includes doctor checkup charges, drugs, hospital bills, medical insurance premiums that are not paid at work via pre-tax dollars, dental care costs, and mileage to and from physicians’ offices.
- Mortgage interest and points on the Form 1098 or any other substitute form
- Casualty and robbery losses
- Investment expenses
- Charitable contributions that maybe cash, credit card, or assets and clothing
- Gambling losses
- Work related costs
For small business owners, receipts and documentation about your company are necessary. These include:
- Income statements
- Home size and office space size
- Keogh, SIMPLE, SEP and other self-employed pension plan contributions
- Self-employed health insurance payments
- Details on use of your vehicle
If you are doing the filing yourself or a tax expert is assisting, you need to consider some details to assist you in filing:
- Did your marital status change in the previous year and if divorced, did you pay out or receive any alimony?
- Do you have dependents not living with you?
- Have you received any correspondence from the internal Revenue Service or state/local tax agencies?
- Have you bought a new home in the previous year?
- Are there any major home improvements made in your home in the previous year?
- Are you incurring any childcare or dependents care expenses?
- Do you own a second residence or any other real estate?
- Did you relocate because of a job?
- Did you have a cancelled non-residential debt?
- Did you make a large purchase, like an automobile?
- Did you serve in the military and if so, did you receive combat pay?
These questions could have answers that add to your tax bill and save you money later.