The Best Tax Preparation Tips For Staying Organized

Tax season can be a stressful time of year. It’s even worse when you can’t find all your documents. To help you stay organized, we’re covering the best tax preparation tips for before, during and after tax season.

Pick One Place to Store Documents

Throughout the year, you’ll have receipts, bills, charitable donations and other documents coming in for your tax return. If you don’t keep them in one place, some will get lost. To avoid hassle, pick one spot to keep all these records and drop documents there as soon as they come in. It could even be a folder or shoe box labeled “Taxes 20XX.” Just have a way to store everything so the documents are easy to find.

After you file, put your completed return in this location. This way you’ll have everything together in case of an audit. If you receive any records digitally, print copies and place them with the rest of your documents.

. . . and Back It All Up Digitally

The IRS can audit your old returns from the past six years, according to Forbes. Will your paper records survive that long? To stay safe, create a digital copy by scanning your receipts or taking a photo. This way, you have one more record that can stand the test of time. Once again, aim to keep all these records in the same place, like a desktop folder.

Keep Your Actual Receipts

When people pay for a deductible expense using their credit card or a check, they often just keep their credit card statement or copy of the check. While this is helpful for your records, it’s not enough for an audit. For example, the IRS can see that you spent $1,000 at an office supply store, but there’s no way to prove that you bought something for your business. To stay safe, it’s best to keep the actual receipts for your records.

Collect This Paperwork

Your tax preparer will ask for these documents to put together your return. Get them together early to avoid delays with your tax preparation.

  • Form W-2
    Your W-2 lists the income from your job and the tax you paid throughout the year. You should get this document from your employer in January. If you worked multiple jobs within the past year, you should receive a W-2 from each employer.
  • 1099s
    1099s list additional sources of income. This could be from working as a contractor, self-employment, interest on your bank account or bonds, dividend payments from stocks, business partnerships or selling real estate. You get a 1099 from each source of income. For example, if you did contract work for four clients, each will send you a 1099.
  • Form 1095-B
    This is an annual form issued by your health insurance carrier. It shows the coverage for you and your dependents on a month-by-month basis for the whole previous calendar year. If you received health insurance through your job, you should receive this form. Your tax preparer may need it to see if you qualify for a health insurance tax credit.
  • Form 1095-C
    This form is purely informational and does not need to be filed with your tax return. It is sent by (or on behalf of) an Applicable Large Employer (ALE). If you worked at an ALE during the tax year, you will receive this form. If you need specific information about your health insurance to complete your taxes, you may need to have your Form 1095-C handy. For more information, see the Form 1095-C Guide for Employees.
  • Brokerage Statements
    If you have any brokerage accounts, your tax preparer may want your statements to calculate the taxes on your investments.
  • Real Estate Documents
    If you own your home and have a mortgage, your tax preparer will want Form 1098 to see how much deductible mortgage interest you paid. You should get this form in late January or early February from your mortgage company. You’ll also need to submit your property tax bill, which you can get from your county office. If you itemize your taxes, you may be able to deduct some costs associated with your mortgage. For example, if you participated in your state’s Hardest Hit Fund, you can deduct all the payments made to your mortgage servicer during the tax year.

Preparing for your tax return is a lot easier when you’re organized. Start today by finding a safe place for all your 2016 documents and then keep that system going for 2017. You can get started right now by logging in to iPayStatements, where you can access your W-2 and 1099s.

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