Tax Document Checklist: Get Ready to File Your Taxes

Getting ready to file your taxes might seem like a daunting task, but being well-prepared with the right documents can make the process significantly smoother and less stressful. Think of gathering your tax documents as assembling the pieces of a puzzle – each piece is essential to complete the picture of your financial year and ensure you file accurately and potentially maximize your refund or minimize what you owe. Before you even think about filling out tax forms, take the time to collect all the necessary paperwork. This upfront effort will save you time, reduce errors, and help you navigate the tax filing process with confidence.

So, what documents do you actually need? Let’s break it down into key categories:

1. Identification for You and Your Dependents:

• Social Security Numbers (SSNs) or Individual Taxpayer Identification Numbers (ITINs): You’ll need your SSN and the SSNs or ITINs for your spouse (if filing jointly) and any dependents you plan to claim. This is fundamental for identifying everyone on your tax return. Make sure these numbers are accurate to avoid processing delays.

2. Income Documents:

These documents detail all the money you earned throughout the year. The most common income documents include:

• Form W-2, Wage and Tax Statement: This is the most crucial income document for most people. You’ll receive a W-2 from each employer you worked for during the tax year. It reports your wages, salary, tips, and other compensation, as well as the amount of federal, state, and local taxes withheld from your paychecks. Expect to receive these by January 31st.

• Form 1099-NEC, Nonemployee Compensation: If you worked as a freelancer, independent contractor, or gig worker, you’ll receive Form 1099-NEC. This form reports payments of $600 or more for services you provided to a business.

• Form 1099-MISC, Miscellaneous Income (for certain situations): While 1099-NEC is now primarily used for nonemployee compensation, you might still receive Form 1099-MISC for other types of income, such as rent payments, prizes, or awards (though these are less common now).

• Form 1099-INT, Interest Income: If you earned interest from savings accounts, CDs, or other investments, you’ll receive Form 1099-INT if the interest earned is over a certain threshold (usually $10 or more).

• Form 1099-DIV, Dividends and Distributions: If you own stocks or mutual funds and received dividends, you’ll receive Form 1099-DIV.

• Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.: If you took distributions from retirement accounts like IRAs or 401(k)s, you’ll receive Form 1099-R.

• Form 1099-B, Proceeds From Broker and Barter Exchange Transactions: If you sold stocks, bonds, or other securities, you’ll receive Form 1099-B, detailing the proceeds from these sales.

• Records of Self-Employment Income: If you are self-employed and don’t receive 1099-NEC forms for all your income, you need to keep your own records. This could include invoices, bank statements showing deposits, and records of cash income.

• Unemployment Income (Form 1099-G): If you received unemployment benefits, you’ll receive Form 1099-G, which reports this income.

3. Deduction and Credit Documents:

These documents support any deductions or credits you plan to claim, which can reduce your taxable income and tax liability. Common examples include:

• Form 1098, Mortgage Interest Statement: If you own a home and pay mortgage interest, you’ll receive Form 1098 from your mortgage lender.

• Form 1098-E, Student Loan Interest Statement: If you paid student loan interest, you’ll receive Form 1098-E from your lender.

• Records of Charitable Donations: Keep receipts for cash donations (bank statements, canceled checks, or written acknowledgments from charities) and records of non-cash donations (like clothing or household goods). For donations over $250, you’ll need a written acknowledgment from the charity.

• Medical Expense Records: Keep track of medical bills, prescription costs, insurance statements, and payments for medical services. You can deduct medical expenses exceeding 7.5% of your adjusted gross income (AGI) if you itemize deductions.

• Childcare Expense Records: If you paid for childcare so you could work or look for work, keep records of payments to childcare providers, including their name, address, and tax ID number.

• Education Expense Records (Form 1098-T, Tuition Statement): If you paid tuition for higher education, you might receive Form 1098-T from the educational institution. Also keep records of qualified education expenses like books and fees.

• Retirement Contribution Records: If you contributed to a traditional IRA, keep records of your contributions, especially if they might be deductible.

• State and Local Tax (SALT) Records: Keep records of state and local income taxes paid, real estate taxes, and personal property taxes. The deduction for SALT is currently capped at $10,000 per household.

4. Bank Account Information:

• Bank Account and Routing Numbers: If you are expecting a refund and want it direct deposited, you’ll need your bank account number and routing number. Similarly, if you owe taxes and want to pay directly from your bank account, you’ll need this information.

5. Prior Year Tax Return (Optional but Recommended):

• Having a copy of your previous year’s tax return can be helpful as a reference. It can remind you of information like your adjusted gross income (AGI) from the prior year, which might be needed for electronic filing, and serve as a guide for common deductions or credits you claimed in the past.

Organization is Key:

Once you’ve gathered all these documents, organize them! It’s helpful to create folders or piles for each category (income, deductions, etc.). Having everything in order will make the tax filing process much less overwhelming, whether you’re filing yourself or working with a tax professional. Remember, it’s always better to over-prepare than to be caught short when it’s time to file your taxes.