It’s that time of year again – time to gather your information and prepare to file your tax return. If you want the process to go smoothly, make sure to gather and organize your information before sitting down with your tax preparer. You may be surprised how fast the entire filing process goes if you spend a little time preparing!
Here’s a list of some items to compile before you get started.
Hopefully you know YOUR social security number and date of birth by heart. But do you know your spouse’s SSN? Your kids? Make sure you remember to bring the social security numbers and birth dates of everybody who will be claimed on your tax return.
While your W-2 is important, there are many other pieces of information you will need to collect before you will be able to get started. Gather the following pieces of relevant information:
- W-2s for you and your spouse.
- Investment income: This type of income will be listed on various 1099 forms including –INT, -DIV, -B, etc). You may also have K-1s and stock option information to provide to your tax preparer.
- Income received from state and local income tax refunds and/or unemployment. This income can be found on the Form 1099-G.
- Gather information about any alimony you may have received.
- If you are a business owner or farmer, don’t forget to provide a profit/loss statement and capital equipment information. And if you use your home for business, your tax preparer will need to know the size of your house, the size of your office and what you have paid to maintain your home and office.
- You will need to provide your IRA/pension distributions as well. This information will be provided to you on Forms 1099-R or 8606.
- If you rent a home or other type of property, be sure to gather that information that proves the profit or losses you realized as a result of the rental.
- Be sure to claim any Social Security benefits you may have received. This information is found on Form SSA-1099.
- If you sold your house in 2014, you must provide your tax provider with Form 1099-C, which will include the income you received from the sale of the property. Your preparer will also take the home’s original cost and cost of improvements, the escrow closing statement and cancelled debt information into consideration.
- Some other information you will need to pass along to your tax preparer includes items such as jury duty, gambling winnings, scholarships, etc.
Adjustments To Your Income
Now that you have collected all the information you can to adequately identify your income in 2014, some adjustments may need to be made. Making the following adjustments to your income may help increase your tax refund or lower the amount you owe to the government. If you have documentation of any of the following information, be sure to bring them to your appointment.
- IRA contributions
- Student loan interest
- Medical Savings Account contributions
- Moving expenses
- Self-employed health insurance payments
- Pension plans such as SEP and SIMPLE
- Alimony you paid
- Educator expenses
Itemized tax deductions and credits
This is another way to increase your refund or reduce what you owe. The following deductions and credits help lower the tax burden on individuals. Be sure to collect this information before filing your return.
- Child care costs – child care provider’s name, address, tax ID number and amount paid
- Education costs – these can be found on Form 1098-T
- Adoption costs – the SSN of the child as well as legal, medical and transportation costs associated with the adoption
- Home mortgage interest and points you paid, which can be found on Form 1098
- Investment interest expense
- Charitable donations that were made to not-for-profit organizations. Make sure you have the amounts and value of the donated property, and any out-of-pocket expenses you may have accrued in your effort to make the donation, including transportation costs. Include receipts for any contribution over $250
o Losses you realized as a result of casualty and loss (the cost of the damage and insurance reimbursements
- Medical and dental expenses
- Energy credits
- Other deductions include items such as union dues, unreimbursed employee expenses, such as unreimbursed employee expenses
New for 2014 returns
For the first time, you will need to provide information about your health insurance coverage to your tax preparer. Be prepared to answer questions such as these:
- Was everyone claimed on your tax return covered by health insurance?
o If not, why?
- Did you or anyone on your return obtain health insurance coverage through Healthcare.gov or through a state run exchange in 2014?
o If yes, did any of those individuals receive a premium tax subsidy, cost reduction, or premium tax credit? If yes, provide Form 1095-A.
It’s likely that you have already started receiving tax forms in the mail from various places. It’s easy to misplace these documents if you’re not careful. If you haven’t already, set aside a place for these items until you have collected them all. Once you have everything you need, you can set an appointment to file your taxes with your financial advisor or tax preparer. For additional tax information, or to speak with a tax expert, email Rea & Associates.
By Lesley Mast, CPA (Wooster office)