Helpful Tips to Make Tax Time Less Taxing
After the New Year celebration settles, many begin to feel the dread that accompanies their rapidly approaching tax filing deadline. For many, this anxiety increases as a result of a promotion that came with a salary windfall or a lottery win. Even the loss of a job or a decrease in income may create that same level of anxiety.
Preparing ahead of time for the filing of your income taxes can reduce your stress.
Life has enough stressors, taxes should not be one of them. Use this itemized list below to assist you with gathering your important tax documents before scheduling your tax appointments.
- Collect all the necessary documents. Prepare or maintain a 2017 Tax Folder or manila envelope in anticipation of all documents that arrive in the mail with the caption “Important Tax Documents” or “Tax Documents”. If such captions are not included, be on the lookout for these important tax documents as they arrive in the mail.
- Form W-2: Form W-2 is filed by your employer to report wages, tips, and other compensation paid to you as well as FICA and withheld income taxes. The company you work for must file a Form W-2 for each employee from whom income, social security, or Medicare tax was withheld.
Time Saving Tip: Prior to scheduling your appointment with a tax advisor, verify the completeness and accuracy of the W2 filed by reviewing it against your pay-stubs. Common errors on the W-2 include incorrect social security numbers, misspelled names, or inaccurate wage reporting.
- Form 1099-MISC Miscellaneous Income: You should receive a Form 1099-MISC if you were paid at least $600.00 for services you performed as a contractor. You may also receive Form 1099-MISC if you were paid at least $600 in rental income, prizes and awards, medical and health care payments; or other income payments.
Time Saving Tip: Maintain a summary of payments you receive as a contractor or from any other income payments mentioned above. You can maintain this schedule using an Excel or Word documents. You may also keep this information using various electronic apps that track income and expenses. This schedule will become very handy when you review the accuracy of your Form 1099-MISC.
- Form 1098, Mortgage Interest Statement: You should receive a Form 1098 if you paid mortgage interest of $600 or more during the year. This form generally comes from your mortgage company.
Time Saving Tip: If you refinance your mortgage or if your mortgage loan was sold to another lender, be sure to obtain Form 1098 Mortgage Interest Statements from both lenders if the mortgage interest that you paid during the year was $600.00 or more. People tend to forget about such changes especially if they occur during the beginning of the prior year.
- Remember to include other important tax documents such as charitable contribution receipts, Form1098-T, Tuition Statements and investment statements such as 1099-DIV, Form 1099-B and 1099-INT
Filing taxes doesn’t have to be a stressful process. Organization is the key. Keep track of your important documents and receipts.
About the Author: Riolene Ibok, CPA is the President of Accounting & Tax Advisory Group PC. She is a licensed CPA in the State of Georgia and holds a MBA from Georgia State University. Riolene specializes in tax, accounting, consulting and audit services for individuals and small businesses. You can contact Riolene at firstname.lastname@example.org.