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The Best Ways for Individuals and Families to Prepare for Tax Season

Prepare for Tax Season by Organizing Uploading Your Tax Documentation, Myrick CPA DC“Preparedness is the ultimate confidence builder” – Vince Lombardi

The time for reporting income taxes is here once again. For many, it’s a time of high anxiety, but it doesn’t have to be. As with most daunting tasks, a little preparation can go a long way toward alleviating stress and assuring smooth progress. Time spent organizing and uploading your documents prior to your virtual appointment with your CPA will serve you and your tax preparer well on multiple levels. 

For example, as you are putting your files in order, it will likely refresh your memory of events throughout the year, which may affect the amount of taxes owed. Better yet, being prepared will inevitably cut down on the time needed to complete tax filings, since there will be less back-and-forth between you and your CPA. Here are some of the best ways for individuals and families to prepare for tax season.

General Documents

Each year the IRS works to eliminate tax-related identity theft by requiring several identification details.

  • A photo ID for the primary taxpayer and social security cards for you, your spouse, and any dependents. If you’re unsure of a dependent’s status, have their documents available anyway.

  • Birthdates for you, your spouse, and any dependents.

  • Identity Protection (IP) PINs for you and your spouse. Starting in 2011, the IRS began issuing annual PINs to help combat identity fraud. If you are not enrolled in the program, you can apply online or in-person to receive an IP PIN each year.

  • Copies of tax returns from the past two years. They contain valuable information for the tax preparation staff to ensure items are reported consistently - and this will significantly reduce your chances of an audit.

  • Bank account information (or voided check) for direct deposit of your refund.

Be sure to put together a list of any questions before your appointment in order to ensure no issues are overlooked as your CPA reviews the information you’ve submitted. 

Income and Loss Documentation

As the year progresses, you should tuck away all your documents pertaining to tax filing in a file folder or large envelope. Electronic statements may be downloaded in advance to a memory stick to be submitted digitally when it’s time to file. Any non-digital (paper) documents must be uploaded electronically. An efficient way to do this (if you have only got a paper version) is to take a clear photograph of the document in question with a digital camera or your mobile device.

  • All W-2 forms. If you moved at any time during the past year, make sure you’ve provided your current address to all employers so that you'll receive all your W-2s on time.

  • Any form that starts with 1099. The IRS has created an alphabet soup of 1099 forms for all sorts of income, from interest, pensions, unemployment, and tax refunds.

  • Self-employment income proof like sales receipts, financial reports from online sales apps (like Zelle or PayPal), and/or bank statements.

  • Any other funds received, including alimony payments, gambling winnings, and property sales.

Documented Expenses

Tax deductions and credits are reported to offset the income earned, reducing the amount of taxes owed. Deductions reduce the amount of taxable income, while credits lessen the actual tax balance.

  • Contributions to a retirement plan such as a 401(k) or IRA

  • Mortgage statements and closing documents if you financed a home, as well as property tax bills

  • Student loan statements and college tuition paid

  • Charitable donations

  • Information regarding childcare, including name, address, and Federal TIN

  • Medical and dental expenses – these need to add up to a significant amount before they are reported, so be sure you have accounted for all of them

  • Un-reimbursed employment expenses like teaching supplies, PPE, and mileage

  • Any other forms starting with 1095- or 1098- 

  • Anything which is marked “IMPORTANT TAX DOCUMENT”

If you haven’t started collecting your documents yet, February is a good time to start.  You should have received all of your W-2s and 1099s by the end of January. Time spent organizing your documents tends to have a positive snowball effect on tax preparation. Less time spent by the preparer can lead to a lower tax preparation bill for you and often a speedier submission to the IRS. Along with online submission, the IRS can review your return quickly, and you can move on to enjoy the rest of the year.

Once you have all your tax documentation in order, contact Myrick CPA to schedule your convenient virtual tax preparation appointment.