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STUFF YOUR TAX PREPARER NEEDS
How many times has your current tax preparer said "I need more information to
lower your taxes." (which ultimately decreases your balance due or
increases your refund)? Probably not enough.
I don't know about all tax
preparers, but I do know that I do not want my clients paying more than their
"fair share" of taxes. To do this, I need information, and a lot of
it. And only YOU can provide it.
With the increase in the standard
deduction, more and more taxpayers will not be able to itemize their deductions.
This, in and of itself, does not hurt the taxpayer. It only hurts when you CAN
itemize and you DO NOT itemize. Then you are paying more than your "fair
share". So when I think you CAN and ask for more information, please do
your best to provide it. Taxpayers who are entitled to deductions from income,
tax credits, and/or adjustments and do not take them are paying more than their
share, too. I am only trying to lower your tax bill, so please make my task
easier.
While the tax laws may change from year to year, the basic information you need
to do your return or take to your tax preparer doesn't change that much from
year-to-year. What may change is what you can DO with the information. So,
here's a reference of most of the data you might need and who should have it or
keep track of it.
Personal data
- Social Security numbers & birthdays (including
spouse and children/dependents). These are required to qualify for exemptions and
most tax credits.
- Your child or day care provider's tax I.D. or Social
Security number. This is required to qualify for child care credits.
Employment & income data
- W-2 forms for this year. These come in January from
the employers you received wages from during the previous year. They are
required to send your W-2 to the address they have on file for you. If you
have moved since you last worked for them, it is your responsibility to make
sure that they have your current address.
- Estate and trust income. Data on Form K-1 for
these should come from the estate's trustee, or their accountant or financial institution.
- Pensions and annuities. Data on Form 1099-R
should come from the financial institution, or the insurance company
handling the
annuity or pension fund.
- Alimony received. Tax information may come
from your ex-spouse or his representative. There is no prescribed form for
reporting how much alimony you received. The amount of your alimony income
should match the ex-spouse's deduction for alimony paid to you. The former spouse will need your
Social Security number to be able to deduct any alimony payments.
- Jury duty pay. Data should come from the court
clerk. Generally, the information is from the checks stubs provided when the
payment is made.
- Gambling and lottery winnings. This data should
come from the casino or lottery authority. Form W-2G
- Prizes and awards. Data should come from the
award givers. Form 1099-MISC Box 3.
- Scholarships and fellowships. Data may come from
the administrators of these programs. Form 1099-MISC.
- State and local income tax refunds. Data should
come from the taxing authorities. Form 1099-G
Homeowner/renter data
- Residential address(es) for this year. This is
your responsibility.
- Mortgage interest: Form 1098. Your lender will
send you this data.
- Sale of your home or other real estate: Form 1099-S.
Your lender or closing agent should send you this.
- Second mortgage interest paid. Your lender
should send you this data.
- Real estate taxes paid. Your county tax office
can provide this or
lender should send you this data.
- Rent paid during tax year. Some states have a
renter's tax credit. WV does not. You need to generate
this data.
- Moving expenses. If your expenses are reimbursed
by an employer, the employer will furnish you with data on the moving costs.
Financial assets
- Interest income statements: Form 1099-INT &
1099-OID. Financial institutions will provide this data.
- Dividend income statements: Form 1099-DIV. This
will come from thes company paying the dividends.
- Proceeds from broker transactions: Form 1099-B.
Your brokers should furnish this data.
- Tax refunds & unemployment compensation: Form
1099-G. The issuing agencies should send this information.
- Miscellaneous income including rent: Form 1099-MISC.
This should come from whomever distributes the income.
- Retirement plan distribution: Form 1099-R.
Whoever sends out your pension checks should send you this data on Form
1099-R.
Financial liabilities
- Auto loans and leases (account numbers and car
value) if vehicle used for business. You can get this data from the
lender or leasing company.
- Student loan interest paid. The lender should
furnish this data.
- Early withdrawal penalties on CDs and other time
deposits. This data should come from the financial institution.
Automobiles
- Personal property tax information. This data
should come from the taxing authority.
Deductible expenses
- Gifts to charity (receipts for any single donations
of $250 or more). Receipts should come from the charity at the time of
the deduction. Many churches provide an annual statement of giving. Gifts to
charities may include donated items as well as donated money, You
should still keep track of your own donations.
- Un-reimbursed expenses, including mileage records,
related to volunteer work. You will need to keep your own records for
this.
- Un-reimbursed expenses related to your job (may
include such items as travel
expenses, entertainment, mileage, uniforms, computer, cell phone, beeper,
union dues, subscriptions). You will need to keep this data.
- Investment expenses. Your broker will furnish
some data. Travel, phone and other related expenses are your responsibility
to track.
- Job-hunting expenses, including cost of resumes and
postage. You will need to keep this data.
- Qualified Education expenses. You will need to keep this
data. But if you qualify for Hope or Lifetime credits or other college
deductions, the college involved should send you the data on the qualifying
expenses you've paid via a 1098-T.
- Child or dependent care expenses. You will need to keep this
data or get it from the care provider. Be sure to get the provider's name, Tax-id # or
Social Security #, and full address. It is required for you to take the
credit.
- Medical Savings Accounts. The institution
handling the account will be able to generate your data.
- Adoption expenses. You will need to track this
data.
- Alimony paid. You or the authority dispersing
funds will need to keep this data. To deduct this expense, you will need
your ex-spouse's Social Security number.
- Tax return preparation expenses and fees. Your
preparer can furnish this data to you.
Self-employment data
- K-1s from all partnerships or LLCs in which you are
a partner or member. The partnership management should generate this
data.
- 1099-MISC from all business for which you performed
work as an independent contractor and received $600.00 or more in payment
during the year. You should keep track of this kind of income as well,
to make sure the 1099-MISC is correct. Also, if you received less than
$600.00 during the year from a business, even though you do not receive a
1099-MISC, it is still reportable taxable income.
- Receipts or documentation for business-related
expenses. This is data you should keep and track.
- Farm income. You should track
this information.
Deduction documents
- Federal, state, & local estimated income tax paid
for current year: Estimated tax vouchers, cancelled checks & other
payment records. You must keep copies of this data and track it.
- Federal, state & local estimated income tax paid
in current year for prior year: Estimated tax vouchers, cancelled checks
& other payment records. You must keep copies of this data and track
it.
- IRA, Keogh & other retirement plan contributions.
You can get this information from your financial institutions.
- Medical expenses. You must track this data.
- Casualty or theft losses.
You will need to keep documentation regarding any casualty or theft
losses
.
You will need to keep documentation regarding any casualty or theft
losses
- Other miscellaneous deductions.
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