Tax prep: Records you need to gather now to file next year

Clint Williams
by Clint Williams, Contributor

 

Any job is easier when you have the right tools. When it comes to filing your income taxes, the right tools include the paperwork that documents your financial life. Heading to your appointment with your tax adviser without the proper documents isn’t just a waste of time  it could be a waste of money. Your money.

Having documentation of major life changes may mean more deductions and a smaller tax liability. Many common events, such as having a baby or buying a home, can trigger tax credits or deductions.

“Life changes are life events that drive new tax benefits such as starting a new small business, taking care of new dependent, having a dependent parent or going back to school,” says Mark Steber, chief tax officer for Jackson Hewitt Tax Service Inc. “Life changes drive more tax benefits than tax law changes and if you are not looking for them, you might overlook or miss documenting.”

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The most important document to have when preparing your income tax return, experts say, is your last year’s return.

“One of the best documents to give to your tax advisor is your prior year's income tax return,” said tax attorney Lawrence Ploucha of Fort Lauderdale, Fla. “It contains good information about your income, assets, deductions and other important matters.”

Documents detailing income include:
Wage statements/W-2s
Self-employment business income and expenses/1099-MISC
• Commissions received/paid
• Pension, retirement income/1099-R
• Unemployment income/1099-G
• Canceled Debt Amount/1099-C
• Social Security income/SSA-1099
• State refund amount/1099-G

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Documents that may represent deduction or tax credits include:
• Medical and dental expenses
• Real estate and personal property taxes
• State or local taxes paid
• Estimated taxes or foreign taxes paid
• Cash and non-cash charitable donations
• Mortgage or home equity loan interest paid/1098
• Unreimbursed employment-related expenses
• Job-related educational expenses
• Educator expenses
• Tuition and Education Fees/1098-T