Failing to file your taxes annually could result in late fees or other penalties. The best way to ensure you accomplish your taxes on time and correctly is to get prepared early. Plus, the sooner you get your taxes done, the quicker the weight is lifted off your shoulders - and the faster your return check is put in the mail or bank account.
Figuring everything out can be complicated and gathering all the paperwork can be time-consuming. There are several different items you'll need to accurately file your taxes. Be sure to keep everything organized so completing your taxes is an uncomplicated task.
Personal information
First, you need your personal information as well as any dependents you are claiming, or if you’re filing jointly. For instance, if you are filing jointly with your spouse, you'll need his or her Social Security number. You'll also need your children's Social Security or tax ID numbers. Plus, if you have children you’re sending to a care center, it's important to have information about the center so you can file for child care credit.
Employment and income
Next, it's important to have all the information regarding the income you made in the previous year. This can be through an employer, unemployment, self-employment or investment properties. If you worked through an employer, it is common you will receive a W-2 form at the end of January each year. If you have received income in other ways, you will need other forms:
● 1099-MISC for self-employment
● 1099-G for unemployment
● 1099-R for pension, annuity or IRA income
● Records for rental property information, including income and expenses, as well as asset information to calculate depreciation
Banks and investments
Just as your employers are expected to send you a W-2, the institutions where your money is being kept are also expected to send you statements. Interest earnings are considered taxable income, so these statements are important to include when filing your taxes. You'll also need to have a record of any income you made through stocks or other investments.
Receipts and charity
There are plenty of things that are tax-deductible that people might overlook when filing their taxes. Tax deductibles related to your job can include:
● Job hunting expenses, including travel and food
● Uniform cleaning
● Business-related travel
● Industry publications
● Classroom expenses made by teachers for kindergarten through 12th grade
● Moving expenses not reimbursed by your employer
All of those charitable contributions you made throughout the year will benefit you, including:
● Donations made at places of worship
● Travel expenses for charitable purposes
● Donations made to schools
● Any non-cash donations made
Be sure to keep track of medical expenses you made throughout the year, too. Some of them can be deductible, such as:
● Crutches
● Contact lenses
● Hearing Aids
● Prescription Medication
● Eye exams
Be sure you know the expenses you made this year that can be tax deductible and keep the receipts.
All of these forms and receipts can pile up once you start collecting them. To keep them together, designate a particular place in your home for safekeeping. Or, use an app like Dropbox or Evernote to keep electronic copies of them, which are kept in the cloud and accessible on your phone at all times.