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Tax Preparation Checklist To Take Control Of Your Tax Planning Early This Year

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Have you considered compiling a tax preparation checklist? Tax filing may feel complicated at times due to the number of documents and information one has to prepare. Having a tax preparation checklist will give you more power and control over your income tax preparation. So, on your next tax filing, save some time and effort with this income tax checklist.

Tax Preparation Checklist: 22 Tax Filing Details Needed

 

Personal Information

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This is the most basic and most important information that taxpayers need to keep track of. These pieces of information will allow the IRS to know the person filing the tax return, and the persons covered by a particular filing. This important personal information includes:

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  1. Social Security Number (SSN) – This is very important for the IRS because this number relates to all tax filings. The IRS needs the SSN of the taxpayer as well as of the spouse (if married) and of any dependents.
  2. Birthdates – Again, the IRS needs the birthdates of the taxpayers and everyone in his household.
  3. Bank Account and Routing Numbers – This information is necessary for taxpayers who would like to have their tax refunds deposited.
  4. 1095 Forms – These forms determine whether a person needs to pay insurances imposed by the Affordable Care Act. These forms include:
    – A Health Insurance Marketplace Statement (Form 1095-A)
    – Health Coverage (Form 1095-B)
    – Employer-Provided Health Insurance Offer and Coverage (Form 1095-C)

Income Information

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Income Information | Tax Prep Checklist To Take Control Of Your Tax Planning Early This Year
This information leads to the identification of an individual’s source (or sources) of income. Documents under this category include:

  1. Form W-2 – Also called the Wage and Tax Statement, this form declares an individual’s compensation and tax withheld. Individuals file this form every end of February along with Form W-3.
  2. Form 1009 – This form reports an individual’s income apart from those declared in Form W-2.
  3. Business Earnings – These are earnings obtained from selling items or during a regular profession practice.
  4. Investment Earnings – Individuals report income from any forms of investment (including interests, dividends, proceeds from selling bonds/stocks, etc.) on the federal income tax return.
  5. Tax Refund Income – This should include tax refunds from both local and state levels.

Income Adjustment Information

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Keeping track of this information will help an individual get any applicable tax refund with ease. One should include in his tax preparation checklist the following:

  1. Home Buyer Tax Credit – As per the Housing and Economic Recovery Act of 2008, first-time home buyers receive tax credits of up to $7,500.
  2. Green Energy Tax Credit – Individuals who renovate their houses to become energy-efficient can claim credits worth 30% of the costs for all installation of energy-efficient equipment.
  3. IRA Contributions – These are contributions that serve as retirement savings. The annual contribution limit for people below the age of 50 is $5,500.
  4. Mortgage Interest – Home lenders must send homeowners a statement of mortgage interest, which shows the total amount of interest.
  5. Student Loan Interest – Individuals with student loan interest worth $600 and above must declare these on Form 1098-E.
  6. Self-employed Health Insurance – Self-employed individuals may get deductions on payments for medical, dental, and other healthcare insurances for himself, spouse, and dependents.

Credits/Deductions Information

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Identifying this information could help lessen the amount of tax that a filer has to pay. Most of the information indicated below are deductions one must declare on Schedule A of Form 1040.

  1. Education Expenses – Covered by deductions are expenses from pursuing higher education studies and industry-related training. The institution will provide a Form 1099-T to make the tax deduction valid.
  2. Child and Dependent Care Expenses – Individuals who take care of kids or disabled dependents qualify for tax credit of up to 35% of the total care expenses.
  3. Charitable Contributions – This covers contributions and donations made to qualified organizations only. It doesn’t cover as deductible contributions and donations to individuals.
  4. Casualty, Disaster, and Theft Losses – This includes losses to an individual’s home or vehicle not covered by insurance.
  5. Business Expenses – To qualify as deduction, the expense must be common in the industry and necessary for a business operation.
  6. Medical Expenses – An individual may seek tax deduction for medical and dental expenses not exceeding 10% of the gross income.
  7. Moving Expenses – It is possible to include moving expenses as tax deduction if the move relates to a residential or work relocation. Individuals must declare this deduction using Form 3903.

 

One of the objectives in having a tax preparation checklist is to eliminate common errors like those in this video by Knowledge Platter:

Keep this tax preparation checklist as a handy guide for your next tax filing. Not only will this make your income tax preparations faster and less stressful, but also, you’ll be able to do so accurately.

Do you think this tax preparation checklist is helpful for you? Share with us your thoughts in the comments section below.

Up Next: IRS Forms And How To Fill Them Out | Your Easy IRS Form Tax Guide

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