Tax Filing: Tips & Reminders
After the holiday season is over, many turn to summer as the next time of year to look forward to. But six months can be a long time to keep busy, what can we do to pass the time?
Hmm…, I’ve got it, your Taxes! I’m sure that’s just what you were thinking, too.
Probably not. Most likely you could find something more enjoyable to do with your time, but I’m hoping I can share a few tips and reminders to ease the process.
Where to begin? Start Gathering.
- Checklists can be helpful. You may already receive one from your CPA, if not, you can ask if they have one or you can print the Tax Preparation Checklist from TurboTax®.
- Last Year’s Tax Return. This will give you an idea of what you will need to gather this year. If you’ve had any major life changes, it may not have everything you’ll need, but it will be a good start.
- Personal Information. Social Security numbers and dates of birth for anyone listed on your return, including yourself, joint filers, and dependents.
- Important Tax Documents. Be on the lookout. Most will arrive between the beginning of January and the beginning of February, but K-1 mailing deadlines are different and may not be available until mid-March or later.
Review the information.
- Income. Most often, mail gets sent and delivered with no hiccups. Occasionally, however, I have heard of mail never making it to the intended recipient, occasionally. It’s a good idea to review the types of income you had for the year so you don’t forget something. Did you have employment, retirement or Social Security income? Dividend, interest, or rental income? Maybe even jury duty income (if it was a good year). Remember, even if the W-2 or 1099 doesn’t get to you, it probably made it to the IRS.
- Adjustments, Deductions & Credits (oh my!) Now if the jury duty income pushed you into the next bracket, this is where you can get it back down. There are many adjustments, deductions and credits that are available, but whether or not you qualify can be confusing. Often, it’s best to talk to a professional. The list below has some commonly overlooked items and some that require a little extra work:
- IRA Contributions – If your income and cash flow allow, you could contribute to your IRA to reduce your taxable income and your taxes owed. The deadline to contribute is April 15th, but planning ahead can make the process smoother.
- Vehicle License Fees – Depending on the state you live in and how they calculate the fee, you may be able to deduct part of this cost, best to check with your accountant.
- Energy Credit – This was approved for certain energy star home improvements done through December 31st, 2013. You can find more information at energystar.gov.
- Airline Baggage Fees – For self-employed individuals traveling on business, these fees can be added to your deductible travel expenses.
- Self-Employment – If you are self-employed, you pay the employer and the employee share of the Social Security & Medicare tax. To claim a partial deduction on this, look for Schedule SE when filing your taxes.
- Sales Tax – You have two options for calculating your sales tax expenses; save your receipts all year and use your actual expenses or use the IRS Optional Sales Tax Table. If you didn’t save your receipts, you can calculate this deduction by either completing the Schedule A worksheet or using the Sales Tax Deduction Calculator at the IRS website and if you had any major purchases you can add those on top of the calculated tax. Check with the IRS or your accountant for the qualifying major purchases as they can change each year. Be sure to check with your accountant or line 7.
- Charitable Donations – Keep a record of what you donate and to whom. In addition, any donation over $250 requires a receipt or written acknowledgement from the organization describing the donation.
- Child Care Costs – If you pay for child care so you can work outside of the home, you may be able to get some of that back.
Talk to a professional.
- There are many more credits & adjustments and you may qualify for them. If you’re unsure, talk to an accountant.
- You may decide that your situation is too complicated or it might be that you don’t have the time (because you were able to find something more enjoyable to do). If this is the case, talk to an accountant.
- Let us know if you need a referral, we’d be more than happy to help.
Wells Fargo Advisors Financial Network did not assist in the preparation of this report, and its accuracy and completeness are not guaranteed. The opinions expressed in this report are those of the author(s) and are not necessarily those of Wells Fargo Advisors Financial Network or its affiliates. The material has been prepared or is distributed solely for information purposes and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. Additional information is available upon request.