Feelings of dread and the tax season seem to go hand in hand. Will this be the year that you’re forced to deal with an unexpected, huge tax bill? Preparing ahead of time for the filing of your income taxes can reduce your stress. At least you won’t have to go hunting at the last minute for your documents.
April 15th will be here before you know it. Start getting ready today.
Use this list to get organized and file your taxes on time:
- Collect all the necessary documents.
- W-2 Forms: If you held a job in 2014, you should have a W-2 for each job. Find the W-2s for each person in the household that worked. A W-2 contains your wage information and the various taxes that were withheld. Your employer is responsible for getting this form to you before the end of January.
- 1099: This form lists other income, such as contract labor, unemployment, school loans, gambling winnings, and so on.
- 1098: You can find payment information on your 1098. Property taxes and school loan payments are two examples.
- Various income and interest statements from your bank or brokerage. Ensure you have a statement for each account.
- Bank account number: If you’d like your refund deposited into your account, you’ll need your account number and routing number. This information can be found at the bottom of your checks.
- Review all the forms and information. Is everything accurate? It’s not unusual to find a mistake or two. Take the time to perform a thorough examination.
- Collect any work-related receipts for anything you purchased for your job and didn’t receive reimbursement. If you’re self-employed, the list of qualifying items is likely to be much longer. Computers, furniture, marketing expenses, and utilities are all viable deductions for the self-employed.
- Find receipts and proof of energy efficient improvements. You can receive a credit equal to 10% of the cost, excluding labor and installation. The lifetime limit is $500. Items like insulation and energy efficient doors and windows qualify. Have your receipts handy.
- Collect proof of your IRA contributions. Cancelled checks or the brokerage statement are ideal. Your employer will provide your 401(k) contribution information.
- Collect social security information for everyone in the household. For most filers, each child is worth a $1,000 tax credit. The social security number is required to ensure that each child is only claimed once. If you have a young child, it might be necessary to apply for a social security number.
- Collect information regarding charitable donations. It’s becoming more important with each passing year to be able to detail and substantiate your charitable donations. Receipts are especially important. Taking pictures of donated items isn’t necessary, but recommended. Cancelled checks and credit card statements are also important.
- Review last year’s tax return. Last year’s return can be useful. You might find a carry forward from last year that should be applied to your current tax return.
Filing taxes doesn’t have to be a stressful process. Organization is the key. Keep track of your important documents and receipts. Take pictures of items you’re donating.
Make next year better than this year. After your return is filed, develop a system to manage your documents and receipts for next year. Choose a place to store everything you’ll need for the next time. A small amount of preparation can make everything easier in the future. When tax season rolls around, you’ll be ready to go!