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Now that the excitement of the holidays
are over, it is time to begin gathering all of the documents needed to
prepare your tax returns. You will need the following items.
If you have changed your marital status,
you will need to provide the date of marriage or divorce. If you
have divorced, a copy of the divorce decree is required to file your
return. If you are married, be sure to notify Social Security of any
name change and the marriage or your return will be challenged due to a
bad Social Security number.
If you have moved, you will need to
provide the new address and date of move. This will affect your city
returns particularly. If you sold your home, you will need the
escrow statement from the sale of your old home, the escrow statement from
your new home, and the basis of your old home (including all
improvements). Even though the sale may be non-taxable, there are
many items on the escrowed statements that affect your return.
If the number of the dependants have
changed, you will need the full names, birth dates, and Social Security
numbers of the new dependants. If a dependant or spouse died during
the year, a copy of the death certificate with date of death is needed.
If you are filing a return for someone other than your spouse, you will
need your power of appointment as executor or trustee to file the return
and/or receive a refund for the decedent.
If you worked during the year, each
employer is required to give you a form W-2. They are required to
mail them to you by January 31st. Preparing these forms can be quite
time consuming, thus many employers wait until the end of January to mail
them. Employers are not required to give them to you prior to
January 31st. Please wait until the second week of February before
contacting your employer for missing forms (they may be in the mail).
Make sure that you have a form from each employer prior to completing your
return.
You should receive a form 1099INT from
every financial institution that paid you over $10 in interest.
These may be mailed to you or listed on your bank statements.
Remember to report all interest income even if you did not receive a form.
You may deduct any penalty you paid on early withdrawals from a
certificate of deposit.
You should receive a form 1099DIV from
every company that paid you dividends in excess of $10. These may be
mailed to you or shown on your brokerage statements. You are
required to report all dividends including those that were reinvested.
If you received refunds from the state
or local governments, they may be taxable, and you should receive a form
1099G. If you did not itemize last year, these refunds are not
taxable. If you did itemize last year, the refunds are taxable to
the extent your itemized deductions exceed the standard deduction.
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If you received alimony from your former
spouse, it is taxable and needs to be reported on your return. If
you paid alimony it is deductible and should be claimed on your return.
Child support is non-taxable when received, and non-deductible when paid.
However, paying child support may affect the dependency exemption.
If you sold stocks, you will need the
purchase price, amount of reinvested dividends, the date purchased, the
date sold, and the proceeds from the sale.
If you received pension income or
withdrew from your IRA, you need to include this information on your
return.
Unemployment compensation is taxable and
should be included on your return.
Social Security benefits may be taxable
depending on your filing status and adjusted gross income.
Contributions to a regular IRA may be
deductible depending on adjusted gross income, filing status, and coverage
under an employer's plan.
Student loan interest may be deductible
depending on adjusted gross income.
If you are self-employed and paid your
own health insurance, you may deduct 70% of the health insurance.
Gather you medical receipts to determine
if you total medical expenses exceed 7 1/2% of your adjusted gross income.
Be sure to include the mileage for driving to the doctors, hospitals, and
pharmacies.
List your tax payments for the year.
Include payments of last year's state and local taxes paid this year as
well as this year's estimated tax payments.
Interest secured by a mortgage on your
home is generally deductible. However, interest on your home equity
loan may be subject to
Alternative Minimum Tax if it was not used to purchase or improve your
home. If you refinanced your mortgage, your points will be
deductible over the life of the loan.
If you make contributions of $250 or
more, you need a receipt from the charity. If you give non-cash
contributions, you may deduct the fair market value of the donation.
Gifts over $500 require additional information. Gifts over $5000
require an appraisal by an approved appraiser.
Gambling losses are only deductible to
the extent that you report gambling winnings.
We will begin processing tax returns
on February 1st. Call early for your appointment.
James E. Newland, CPA
939 Center Road
Eastlake, Ohio 44095
440-951-9799
Service@NewlandCPA.com
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