You should have received all your tax documents by now. Whether you decide to file your taxes on your own or hire a professional, staying organized is crucial. I organize my necessary documents and group them together to make the process easier for my accountant.
Let’s start with what your preparer does NOT need:
- Utility bills
- Lunch receipts
- List of all your prescription medicines
It’s essential to include all crucial documents when filing taxes. Here are the documents you need to ensure the best tax return possible:
- All W-2s and 1099 statements. 1099s come in many varieties depending on whether the income is from retirement, interest, dividends, royalty payments, social security, cancellation of debt, or jury duty.
- Income earned from self-employment as documented by a balance sheet, income statement, and profit and loss statement. You must report self-employment of more than $400.
- Calculate the sum of all “Estimated Tax Payments” you made last year.
- Form 5498 showing contributions to IRAs
- Form 1098-E documenting interest paid on college loans
- Alimony and child support received
- Form W-2G documenting gambling winnings
If you plan to itemize deductions, you must provide additional documentation. They are:
- Summary of medical and dental expenses, if the total is more than 7.5% of adjusted gross income
- State and local income taxes paid
- State and local real estate and personal property taxes
- Form 1098 documenting mortgage interest and points paid
- Home mortgage interest and points paid to an individual. Include the individual’s name, address, and identification number.
- Summary of charitable donations. It is helpful to include a list, along with the organization’s address to which you donated.
After sorting your documents into categories, creating a summary of your tax information is helpful.
Here’s an example using a fictitious couple. John Doe is 66 and continues to work full-time. His wife Jane is 68 years old; she works part-time and draws social security. I have created a summary of the information that they should provide to their accountant.
| Tax Payers: John and Jane Doe | ||
| 2023 Tax Summary | ||
| Income Summary: | ||
| John’s W-2 income | $52,714 | |
| Jane’s W-2 income | $18,000 | |
| Jane’s social security | $22,177 | |
| Jane’s retirement income | $25,434 | |
| Bank account interest | $47 | |
| 2022 state tax refund | $916 | |
| Total income | $119,288 |
| Adjustments to Income: | ||
| John’s IRA contribution | $23,000 | |
| Total adjustments to income | $23,000 |
| Deductible Expenses: | ||
| Mortgage interest paid | $15,093 | |
| Property taxes on home | $2,843 | |
| Taxes on personal property | $1,794 | |
| Total taxes and interest | $19,730 | |
| Charitable Donations: | ||
| Church | $12,000 | Address |
| Food pantry | $2,400 | Address |
| Christmas toy drive | $500 | Address |
| College alumni association | $600 | Address |
| Total charitable donations | $15,500 | |
| Total itemized deductions | $35,230 |
If you would like a copy of my tax summary spreadsheet, please comment “Spreadsheet” or email me at susan.ball5@aol.com, and I will send it to you.
Make sure to tune in next week for my next blog post on determining whether it’s worthwhile for you to itemize your deductions. I will help you make informed decisions and potentially save you money. Take advantage of this valuable information – sign up for an email subscription and be notified when my next blog is posted.
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