As we reach the end of the year, it is time for that lovely American tradition: tax season. Starting January 1st, keep your eyes on the mailbox (and e-mail box nowadays) for tax forms from employers, banks, investment companies, and other income sources.
To get ready, I always make a full list of what I expect to get and check things off as I go along. Here is a re-visit of a post from last year about preparing for tax time.
Only three months to tax day. It is probably time to start getting ready. Here are my two cents on early tax preparations. The first steps involve making lists and gathering documents needed for tax preparation.
1. Make a list of all of your bank accounts (even ones that you do not use). As your forms start to come in the mail (or are available online), check them off of the list. Most bank tax forms start to come around the end of January. These come in the form of IRS tax form 1099.
2. Make a list of all investment accounts. Like banks, you will get forms starting at the end of January. Unlike banks, most investments do not require that you pay taxes until the investment is sold. Your investment firm will take care of tracking that for you and send you the detail. These come in different versions of the 1099 and several other forms.
3. Make a list of jobs or income sources that will report income to the IRS. I had two jobs this year, but expect three W-2 forms from an extra income source.
4. If you have a mortgage, add that to the list. Form 1098 shows interest paid for a mortgage, which is tax deductible.
5. Collect any other deduction forms. These can relate to education (direct school expenses and student loan interest) or donations. I keep my school book receipts and get a tax form from my school for tuition. I also make donations (not too big, as I am paying for school) to 501c3 charities that allow for a tax deduction.
This is not an exhaustive list, as everyone has unique circumstances. I fill out a form for my accountant listing everything above and give him the big stack of tax forms. I found that a professional preparer is worth the cost in my case because my combination of income, expenses, scholarships, and deductions fall under so many different tax laws that only a professional could ensure I get every deduction and credit that I deserve.
Did I miss any tax forms that you need? Let me know in the comments.