Tax return preparation is around the corner. It is time to start getting ready if you have not started yet.
Get a binder with one or two plastic sheets in it. In one sheet, put a blank paper. Keep a pen in your binder.
Leave it in your bedroom closet.
Each time you open an envelope with the note “ tax information” written on it, put the content of the envelope in a sheet in your binder.
W2s:Soon w-2s would be mailed to those you get it through mail. Put it in a sheet in your binder. If you access it online, in few weeks it would be available. Print it out and put in your binder.
1099s:They should go right away in your sheet in the binder. Expect them from your mortgage company, your self-employment jobs, your investment brokerage firm, your bank, and your employer if you purchase the company stocks. You would receive it through their representative like Computer Share for instance or you can access it online. Even the State send it as well. Open the envelopes and only keep their contents. It only takes a minute or so.
Bank statement for the month of December would have interest earned throughout the year on it. Keep it and add it to your binder. If you have a saving account or interest bearing checking account, you could have earned few cents or dollars during 2017. You are required to report it on your tax return. Some banks don’t send 1099-int unless you earned a lot in interest during the year. Therefore, inspect your December bank statement before you shred it.
Tuition Loan Interest It can be accessed online. If that is your case, print it out or write it on the blank paper in the sheet in your binder.
Car title fee Look for the amount you paid and write it on the paper. It is good to have two sheets in the binder and throughout the year, you keep things you would need to prepare your tax return as you receive them. In this case, once you paid that fee you would have written it down and kept it in your binder and you wouldn’t have to look for it now.
Kids School registration fees: It can be deductible in some states. If you live in one of these states, record them in your binder as you paid them at the beginning of the school year or look for that now. You also include school supplies costs. When shopping for school, buy your kids school supplies required by the school on a separate transaction. Keep that receipt in your binder and you won’t have to guess it during tax season.
Car mileage on Dec 31st or Jan 1st: It is good to record your total mileage on your paper in your binder if you need to claim business mileage on your car, or mileage for medical or volunteering.
Donations: Keep your thrift store receipts for donations in your binder. You still have few days to declutter your closets and around the house and claim it.
Educator fees: If you are a teacher and purchased supplies for your class, total your receipts and write it on in your binder. You can deduct up to $250 on your 1040 and you would most likely spend more than $250. If that is the case, you can claim the rest on your schedule A in a category that only excess over 2% of your AGI is deducted.
There are many information we need you prepare our tax return effectively. If you come across one, take few minutes to store it in your tax binder. It would make your tax return preparation much easier and more accurate.
In the meantime if you have a question regarding your personal tax return or business tax, please feel free to ask. I would be glad to help.
Happy New Year!