Tax day will be here before you know it. Are you ready?
There's no question that preparing your tax return can be a daunting challenge. And the more complex your finances, the more complex your tax return. Whether you prepare your own return or work with a tax professional, there are ways to make the process less burdensome. It all hinges on a bit of upfront organization.
Here are some key activities to consider as you prepare for tax day:
- Have identification numbers handy. Make sure you have Social Security numbers, tax ID numbers, and your dependents’ information like Social Security and birthday dates.
- Collect documents that show your earnings. This includes your W-2 form from your employer, 1099 form for income from interest, dividends, capital gains or freelance work, and be sure to include any other income that may not be reported on a W-2 or 1099 (self-employment income, alimony)
- Gather documents that reduce your taxable income. Contributions to a traditional IRA and/or health savings account, alimony or qualified student loan interest are all examples of “adjustments to income.”
- Have appropriate records and receipts for itemized deductions. Itemized deductions include things like mortgage interest, state and local taxes, property taxes, charitable contributions, and casualty and theft losses.
Don’t forget about tax credits. There are a number of tax credits available such as child and dependent care, qualified adoption expenses or even owning an electric car!