photo © 2009 JD Hancock I have written about taxes a lot in the past. We have discussed the merits of doing your own taxes or hiring an accountant. We have also discussed tax forms you need to understand. I printed off my first 1098-E forms for student loan interest today, and I thought it was a good time for a refresher.
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. 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 (realized gain or loss). 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 charities that qualify for a tax deduction. You can also find energy tax credits for home improvements.
I know taxes are not fun, but it is one of the two certainties in life. Since you are reading this, the other one does not apply. You have to pay taxes. Get a jump start on planning and it will make your life a lot easier come April 18th rolls around.
P.S. Tax day is April 18th this year because April 15th is a Federal holiday in Washington, D.C.
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