The best advice to get ready to prepare your taxes is “don’t wait!” Stay organized year-round in accumulating information that will be needed for tax filing.
If you are a business owner, you should check the profit or loss for your business each quarter. This will help to give you an idea of whether you’ll owe more or less tax this year than the previous year and will also help you determine whether you need to do any year-end tax planning.
Some key things you need to prepare a tax return include:
- W-2s from employers
- 1099s for interest, dividends, rents or sales
- K-1s for any S-corporations, partnerships or limited liability companies
- Revenue and expenses for any sole-proprietorship business
- 1098s from financial institutions for home mortgage interest
- Real estate tax payments
- Contemporaneous receipts for contributions to churches or charities greater than $250
- Estimated tax payments paid during the year, both federal and state
- Records of significant out-of-pocket medical expenses
- Basis information (for example, price at time of purchase) and the date acquired for any assets (stocks, mutual funds, real estate) that were sold during the current tax year
- Statements of tuition expenses and any student loan interest paid (if you have children attending college)
You should also look through your check registers to make sure you find all potential deductions.
The benefits of having your income tax return prepared by a tax professional rather than doing them yourself are:
- The tax laws are complicated and constantly changing and it’s difficult to keep up with it all (i.e., new rules about donating vehicles to charity, new energy credits, etc.)
- A tax professional will give you peace of mind that the return is prepared properly and that all allowable deductions are considered
- Saves you time and headaches
- A tax professional will stand behind his or her work and can represent you, if necessary, when dealing with the IRS
- A tax professional can provide tax advice and planning throughout the year
Don’t wait until the last minute to start thinking about your taxes. Have your return prepared by a qualified tax professional as soon as possible to avoid last-minute stress.
And remember: once your tax return is complete, file it with your previous returns and keep these records permanently.
Email Rea & Associates to learn more.