The old adage says death and taxes are the two sure things in everyone’s life. With that in mind, if you are reading this, it must mean we are talking taxes. It’s time to gather your documents and information for that ritual with Uncle Sam. Whether you do your tax yourself or hire a professional, you will need a number of items to complete the process. Below is a list of some information taxpayers will need for the April 18th filing deadline.
1 – Copies of last year’s taxes. Taxes from the previous year serve as a guideline.
2 – Forms. Various forms confirm the money received from the previous year. Employers must issue W-2 by January 31st. If you receive a 1099, there are several variations depending on the type of payment. Don’t forget to include as income things like alimony, gambling winnings, social security benefits, unemployment or rental income.
3 – Deductions. Deductions reduce the amount of taxable income. Some examples of deductions:
- IRA contributions.
- Medical expenses.
- Educational expenses.
- Union or professional dues.
- Unreimbursed job related expenses.
- Charitable contributions.
- Property taxes.
- Capital losses.
- Educator expenses.
4 – Tax credits. Usually given to encourage some type of behavior. Tax credits can save you money dollar-for-dollar and reduce your tax bill. Some examples of tax credits:
- 401(k) contributions.
- Child tax credit.
- Adoption credit.
- Elderly or Disabled credit.
- Green energy credit (i.e. installing energy efficient windows).
- Earned Income Tax Credit (EITC)
The above is not an exhaustive list but gives a snapshot overview of the information a majority of taxpayers will need. It’s important to consider any life events that may affect taxes. Did you move at least 50 miles for employment? Do you have any casualty/theft losses? Are you a first time home buyer? Did you change your name? Did you include your jury duty payment as income? Were expenses incurred looking for a new job? If you need help, you can go to the IRS website or give them a call.