Tax Organization

Taxes - Organization & Tips

If you’re filing income taxes, it can feel overwhelming with all the documents needed. In addition, the waiting time to determine if you owe anything can be difficult, especially if money is tight already. Getting organized with all the necessary paperwork is a big part of the process. Take these steps for a smoother tax season.

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While there are items that you can gather throughout the entire year (read this article here), you will receive the majority of the documents needed to file your taxes at the end of January to the beginning of February.

As these documents come in, have a folder designated to put them all in. This will save a great deal of time by having them together. Expandable folders are are great for keeping things organized.

IRS Tax Documents

These are some of the main tax documents and data that need to be gathered to file taxes in the United States. Of course, every situation will be different, so there may be other documents received or needed. This will be a good starting point.

W2 – This is a form that your employer sends that shows how much was earned and how much federal, state, and other taxes were deducted.  Every employer that you were employed with will send this. If you changed jobs in the year, then you will receive one from each company. This document is extremely important for filing taxes.

1099-MISC –This form has multiple sources of income, from rents, royalties, other income, etc. to non-employee compensation. Each source has dollar requirements.  For non-employee compensation, if you earn $600 or more (rate in 2017), this form is sent to you.

What is non-employee compensation? It is when you do work for a company and the company does not employ you. It is different than being employed as there are no taxes taken out of your check when you are working contract for a company.

1099-DIV – This form is for any stock dividends or capital gains.

1099-INT – This form is for any interest income. This can be from saving accounts, interest bearing checking accounts, etc.

1099-G – This form shows a State or local income tax refund from the prior year.

As stated earlier, each situation is different, so keep a look out for other IRS documents received.

Other Documents

If you have rental property, gather the income and expenses. Gather the receipts for expenses and summarize them by like expenses or categories. Use an excel spreadsheet or write it down to add them up. Summarize the income as well as appropriate.

If you have a side business, gather the income and expenses. Document the expenses and income by category in an excel spreadsheet or by hand and get totals for the year. Examples would include supplies, postage, and the like for expenses.

If you use childcare, gather how much was spent and the Tax ID number of the company that provided the care. Some day cares may be able to provide a summary of payments and their Tax ID number on a printout.

Locate and have available prior year’s taxes to have the Social Security numbers for those filing and dependents.

Gather all the Charitable donations to qualified charitable organizations made during the calendar year. Total them up by charity to have that data ready when preparing the taxes.

Have your bank account information available for routing  a deposit if a refund is due to you.

Next steps

There are several options to have your taxes prepared.

Company – ask what their price is, decide on a place, make an appointment, and get their specific things they want to see.

Volunteer Income Tax Assistance (VITA) – offers free tax help to those who qualify. Look on the IRS website to see if you meet the requirements. Be sure to check to see what specific things to bring.

Tax Counseling for the Elderly (TCE) – offers free tax help to those who qualify. Check the requirements to see if you meet them here.  Also check to see what things you need to bring with you.

Prepare tax returns yourself – manually or with software like Turbo Tax

Turbo Tax – This software must be purchased each year. It will ask numerous questions that need to be answered. It completes the forms based on the information provided. You do need to check to make sure everything is correct.

Tax season can be a dreaded time of year, but there are things you can do to make it a smoother process. Have a folder where all the tax documents go when they come in to keep them together. Summarize items like income and expenses if you have rental property or a side business. To complete the tax returns, there are various options, from paying a company, VITA, TCE, software like Turbo Tax, or manually.

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Taxes - Organization & Tips

Taxes can be a stressful time with gathering tax documents to keep them organized to preparing the tax returns. It can also be a difficult time waiting to see if you owe anything, especially if money is tight. Follow these steps to make this a smoother process.