I’m going to tell you what I tell everyone else: everything:
- If it comes in the mail and is marked, ‘Important tax documents,’ bring it.
- If your employer hands it to you, bring it.
- If you have no idea what it is and it looks official, bring it.
OK, so you made an envelope or folder or box and gathered it all to do your taxes. So, what are you forgetting? Read on to get a better understanding of how to prepare, and if you want a quick checklist when you are gathering your paperwork, download our printable checklist.
Top 7 things most forgotten by my tax clients
1 – Their children’s social security numbers. Also, their spouse’s social security number. Most people remember their kids’ birthdays but the years they were born may take some thought. I had one guy have an anxiety attack when he realized he couldn’t remember his wife’s birthday. (“It’s not like I can ask her… “) I had her come in to sign and asked for ID. I might have saved their marriage.
2- Childcare paid. I also need their tax ID, address, and phone number. There is not a standard IRS form for this, so you have to ask for it.
3 – Routing and account number for direct deposit refunds. I see so many people scramble for this because no one carries a checkbook and many online bank apps do not show the full account number to keep your information secure.
4 – Mortgage interest statement. Yes, I need the form and not just the interest amount. Some mortgages have gone to online forms in your online account.
5 – 1098T and undergrad expenses. Form 1098-T for college expenses is generally in the student’s online school portal, few are mailed any more. I need the 1098-T. If you are a full-time undergrad student, also bring what you paid for books and required items for class. This includes a computer or software required for class. Bring the receipts!
6 – Student loan interest paid. Also going to online forms in many cases. Log in to your loan processor and look for your 1098-E to get your total interest paid last year.
7 – Finally, the Hud-1 statement from buying or selling a property. If you bought or sold a piece of property last year, you got a mountain of papers at closing. One of those is a long paper with 2 columns of numbers on both sides and HUD-1 at the top. That is the summary of what happened to every dollar at closing. I need that. Bring the whole packet if you can’t find it. It may not affect this year’s tax return, but it will affect something, sometime and getting the numbers together now is much easier.
Things people didn’t think were important to bring “because I already paid the taxes on it”
I have had so many people grossly misled into believing “having the taxes taken out” means it is not reported the next year on their tax return. Biggest ones: Retirement draws (at any age) and Gambling winnings at the casino or track. You will get a 1099-R form in the mail in January for any retirement draws you made. You need to bring the form.
If you hit at the casino, they will give you a W2G form at that time and they will NOT mail you anything in January. It’s your job to hang on to them all year. Here’s how it gets confusing: Taxes are taken out. However, taxes are based on your total income. They have no idea what that will be. They have a flat formula. It’s not like your employer where you can have more or less taken out of your paycheck. Most times their flat formula is 20% federal and 5% state (if the state laws apply).
If you have gambling winnings or you took money from retirement, it gets added to your other income and taxed at the rate of ALL your income. Your tax bracket may be over 20%. Just because they took out taxes doesn’t mean they took the correct amount for you. They just took a standard amount for a deposit. You need to report it on your tax return. Bring me the forms.
But I thought I don’t itemize anymore
Another huge point of confusion is hearing that you can’t itemize anymore. Well, we haven’t gone to a flat tax, you still get to take off a lot of things that are called ‘adjustments’ instead of ‘deductions’. Gotta love tax jargon, right?
***NEW FOR 2021*** Bring receipts for up to $300 in charitable donations. These are deductible.
Also, some states (like Arkansas) have their own standards and forms. Bring it all – personal property tax paid, real estate tax, medical expenses, charitable giving – you might have to itemize on your state’s return. So, bring your teaching expenses if you are a K-12 teacher, your IRA contributions, your health insurance expenses if you are self-employed, your HSA contributions, and your education expenses (even if they weren’t at a regular ‘college’).
These are the “adjustments” that haven’t changed. And nothing has changed in the world of self-employment, you still get to deduct your business expenses. Bring everything for your small business or side gig. That’s another blog…
Don’t worry about health insurance papers, right? No more penalty?
Wrong – if you are paying a reduced premium (ACA, Obamacare, Marketplace), you WILL get a 1095-A and you DO have to report it on your tax return and if you made more or less than you planned, you will get a refund or have to pay the difference of your health insurance premiums. You can log in to where you bought your health insurance and download your 1095-A. However, there is no longer a penalty for not having health insurance. You will not need to bring proof of coverage.
Wait, this stuff is income, too? You’re not kidding?
1099-C – Cancellation of Debt – usually from negotiating with credit cards for a lower balance or letting a car go back to the dealership. If they write off your debt, it is income to you. 1099-A – Abandonment of Property – usually from a foreclosure. It’s very important to bring this, as it may not be taxable if it was your home. 1099-S – Sale of Property – usually when you sell a property and it doesn’t seem to be your primary home. This is very important to bring.
What to Bring
– Everyone’s names, birth dates, and Tax ID (social security) numbers. Bring anything addressed to your dependents, too.
– Form W2 from all employers last year
– SSA-1099 for social security benefits
– Form 1099-R for retirement draws/ pension payments
– Form 1099-misc for payments from people who weren’t your employer (gig, self-employed)
– Form 1099-K for credit card payments received (selling on eBay, driving for Uber)
– Form 1099-INT for interest received
– Form 1099-DIV for any dividends received Brokerage statements from places like Edward Jones or TD Ameritrade
– Form 1099-B for all stock trades.
– Complete buy/sell list from Coinbase or wherever you buy/sell cryptocurrency.
– K-1s from any companies you own, family trusts, estates.
– Business and Farm info Rent house info (income, insurance, interest, taxes, and repairs)
– Investment info – this includes property flipping, collectibles, etc
-***NEW FOR 2021*** Bring the amounts of your Economic Stimulus Payments and the dates received.
Everything listed above and ANYTHING that you don’t know what it is. It’s better to bring far too much than for me to send you home with homework. Visit our shop to download a simple checklist to keep yourself on track.