Now that we have come upon another tax season (that noise you hear in the background is the sound of our staff sighing), we typically spend the first few days getting our office organized for the oncoming rush.  Getting organized is also good advice for most of our clients as well.

When many clients approach us about how to lower their tax preparation bill, our primary advice to them is to review their prior year return, make notes of items which will be coming in again this year (1099's, K-1's, 1098's, etc) and to save everything they receive in a special box or folder. 

 Tax filing season can be much less frustrating and less time-consuming for both us and our clients if they have all the material we will need at their fingertips.  This article will assist you in remembering and gathering all of the documents you will need to file your taxes.

Social Security Numbers

The IRS tracks every taxpayer and dependent through a Social Security number. Make certain that you have supplied us with the correct numbers for not only yourself, but your spouse and every dependent you will be claiming on your tax return.

If your kids don't have their numbers yet, contact the Social Security Administration immediately. A missing Social Security number for any person listed on your return could delay the processing of your return and slow down any refund due you.

Also, if you file for the child-care credit, you will need the tax identification number of the person or business that takes care of the kids while you're at work. You should receive a statement from the care provider that includes his or her tax ID number, as well as the amount you paid, so you can use it to claim the credit.

W-2s

By the end of January, you should receive a Form W-2 from each of your and your spouse's employers showing how much was earned, how much is taxable and just what taxes were withheld.  

Companies do make mistakes.  When you receive your W-2, check the Social Security number for accuracy and compare the numbers to your last pay stub.  A mistake on your W-2 can be very costly if not caught and corrected. 

Your W-2 form will also list any state and local income taxes you paid which is deductible as an itemed deduction on your return.

1099's

If you do business as an independent contractor, the companies you worked for should send you a Form 1099-MISC showing your gross earnings.

You should also get 1099-INT statements from each of your savings account holders, as well as formal tax forms. Copies of the forms also go to the IRS.

You will receive a Form 1099-DIV for each stock, mutual fund or money market account. Reports on the proceeds from broker transactions (sales of stocks, mutual funds, etc),  will be sent to you on a Form 1099-B.

Just like with your final paycheck stub, hang onto your year-end financial statements from your brokers and financial institutions to compare with the official tax documents early next year.

If you received a state tax refund last year, you should be receiving a Form 1099-G detailing your refund.  It also goes to the IRS, so hang on to your copy and report it.  You will also receive a 1099-G if you received unemployment benefits during the year.

Some retirement payouts are taxable, at least in part. To help you determine exactly how much you owe you'll get a Form 1099-R showing how much was paid to you during the year.

Schedule C - (Self-Employed) Earnings

If you're self-employed, you will obviously have a lot more work to get organized. You'll need to track down all receipts and documentation for business-related expenses: mileage records for business use of your car, purchases of office equipment and supplies and payments made for services, utilities, phone, etc.

If you had the business during the previous year, you can review your prior year tax return as a reminder of the expenses you will need to track again this year.

Schedule R - Rental Property

If you have rental property, you will need to review your prior year return and gather up all of this year's income and expense records just as you would for any other business venture.  Don't forget important expenses like travel mileage for trips to maintain and watch over your properties.

1098's

As most homeowners are aware, the interest you pay on a mortgage is deductible. Your lender will send you a Form 1098 with this amount. But now is the time to check out your loan amortization schedule and get an idea of just what the deductible interest amount will be.

If you made an extra mortgage payment this year to up that interest amount, make a note of it. Sometimes lenders use automatic reporting programs that overlook extra payments. But you can still claim the extra interest; just make sure you document it in case the IRS follows up.

Mortgage interest also isn't limited to your primary residence. If you have a vacation home, interest on that loan will be on a separate Form 1098 -- and is just as deductible.

If you have a home equity loan, you should bring us your year-end loan account statement since that interest will also be deductible as mortgage interest.

Your Form 1098 will also have an amount for the real estate taxes paid from your escrow account if you have your bank make that payment for you.

Other Deductible Items

If you paid state or county charges for personal property tax on an auto, boat, etc, make certain that you bring either the taxing statement or a cancelled check to show the amount you paid.

Did you look for a new job this year? Kept your job, but had to shell out for work-related items? Move to take a new job?

All of these situations can help reduce your tax bill, as long as you've got the documentation. In the case of job searches, find those receipts for anything related to your hunt -- as long as you're looking for work in the same field.

If you kept your current job, but had to pay for some items that the company didn't reimburse you for -- travel expenses, uniforms, union dues, subscriptions -- then these can be deducted as miscellaneous items on Schedule A. Again, you'll need the receipts, so go through your paperwork collection carefully.

Cash donations to qualified charities can be deducted, and you should get a note from the charity acknowledging your gift if it was $250 or more. You'll need that receipt you got when you dropped those clothes and books off at the local Goodwill collection center, so you can claim a deduction.

If you performed volunteer work with a local charity, you can deduct the miles you traveled in your personal auto at 14 cents per mile as a charitable gift. Documentation of your effort can be as easy as a notation in your calendar of the days you worked and where the charity is located.

By knowing what information you need, digging out those documents now and keeping an eye on the tax-related forms as they arrive, you'll immediately realize if any are missing. If that's the case, you'll have plenty of time to track down the documentation -- saving you time, anxiety and possibly money (both taxes and tax preparation fees) during the current tax season.