How to get ready for 2019 tax return?

Preparing your 2019 tax return smoothly without missing documents, requires you to file your documents as you received them in the mail. You might have to print some documents yourself if you have opted for their online statements. Here is how you should file your documents in order to have them all in one spot and ready for your tax preparation:

 

If you file your return in a binder, add two plastic sheets in the binder for the tax year 2019. One of the sheets would be for tax documents you would start to receive in the mail and the other sheet would be for a copy of the 1040-tax return.

Tax Documents

The sheet that would house the tax documents should have been in the binder early 2019. Therefore you should add another sheet for 2020 documents you would file tax with in 2021.

  1. When you make donations to Habitat of Humanity or Goodwill or similar stores that are tax deductible you should fill up the form with your name, date, and items type donated while it is fresh in your mind and file in the sheet. Itemized deductions may not be necessary for your Federal return but might be beneficial on your state return if you are eligible to claim them.
  2. School supplies: when your state allows you to deduct school supplies on your state return, print a copy of the receipt when you make your back to school shopping and file it.
  3. School registration fee: If you are eligible to deduct school registration fee, once you paid your kids’ registration at the start of their academic year, print a copy of the receipt and file it in the sheet

If you have not filed these documents and think you might need them look for them for 2019 and add them to the plastic sheet in your tax binder. Now that the New Year started you would receive tax documents and some you might have to print them. When you receive a tax document in the mail, open the envelope and put the document in the plastic sheet that houses your 2019 tax documents. Included in these documents are:

  1. W-2s
  2. Form 1098 Mortgage Interest Statement
  3. Schedule K-1 form1065 from publicly traded partnership in case you purchase a partnership stock in your brokerage account. These forms tend to arrive late in March.
  4. Cash donation to your church.
  5. 1099-G from your state if you received state tax refund.
  6. Your state 529 annual statement form: if you contributed to 529 for your kids through your state, you could deduct your contribution on your state tax return.
  7. Bank statement as of December 31, 2019 to record the interest earned on your saving account and or checking account if you have bearing interest checking account. If your bank doesn’t send you 1099-Int. to report the interest, you have to rely on your bank statement or go online and print the statement to file in your sheet.
  8. Form 1099-Div: If you invest in your employer stock or invest directly in some companies stocks through direct stock purchase plan via their transfer agents like Computershare for instance, you might receive 1099-Div in the mail or you need to log into your account online and print it out.
  9. Form 1099 Composite from your brokerage firm that include 1099-Int, 1099-Div, and 1099-B. If the 1099 Composites are not mailed to you, you should log into your account online and print them out to file.
  10. 1095-C Employer-Provided Health Insurance Offer and Coverage
  11. Daycare fee paid during the year
  12. Record of online purchases you have to pay tax to your state. Some states require you file consumer use tax on online purchases. Keeping receipts of these transactions in your file would help you file and pay your consumer use tax more easily. It is a good idea to keep a spreadsheet in your computer to record these purchases and have a column to calculate which purchases you need to pay tax on.

 

Whether you prepare your own tax or hire an professional to do it for you, Have all your tax documents on hand limit the risks of missing some documents or missing the opportunity to claim some deductions you are eligible.

If you have a question regarding a particular document whether it need to be file with your tax document, feel free to send us your question.

If you are a small business owner and are getting ready to file your business tax or file W2/W3 with social security or any other business tax related questions, let us know if we can. I am getting ready to file my businesses taxes. I have 3 LLCs with one being taxed as an S-Corp, and a sole proprietor. I file our own taxes and have already started the process for 2019 tax return. If you are a business owner, don’t wait the last minute to start gathering your tax documents.

Do you file your own tax? Let us know in the comment.

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