Robert Loe CPA

Your tax appointment – here’s what you’ll need

what-not-to-bring-tax-appointmentIt may seem obvious that those envelopes marked “Important Tax Documents Enclosed” contain something you want to bring to your accountant.  There are many other items, however, that may be necessary to complete your tax return, even if it doesn’t seem very complex.  Reading through this suggested list of documents should help make compiling your tax information easier.  Who knows, maybe you’ll see some new deductions you never knew you qualified for.

Income:

W-2: This popular form reports wages, tips, and other compensation from your employer.

1099-INT and 1099-DIV: These forms report interest and dividend income.

1099-B: If you trade stocks or mutual funds, your brokerage firm should provide you with the proceeds from the sales on a Form 1099-B.  However, this is only half of the transaction.  To determine the gain or loss, you must also know the cost or other basis.  Your brokerage firm should be able to provide this information to you in the form of a gain and loss report.  The IRS has imposed more specific reporting requirements on brokerage transactions in recent years, so be sure to include all pages of your brokerage report to ensure that your accountant has all necessary information.

1099-MISC: This form reports income that you may have earned as a non-employee.

1099-G: Reports unemployment benefits or other government payments received.

1099-R: Reports distributions from pensions, annuities, retirement accounts, etc. which may or may not be taxable and/or subject to penalties.  It is advisable to discuss tax implications of drawing from retirement with your accountant before taking the money out of your account, especially if you’re under 65.  Improper planning can subject a taxpayer to early withdrawal penalties, on top of regular tax.

SSA-1099: Reports social security benefits received, a portion of which are taxable, depending on your income level.

1099-Q: Reports distributions from qualified education programs.  Also necessary is the amount spent on qualified expenses, which for this purpose include tuition, fees, books, supplies, equipment, room and board.

1099-SA: Reports distributions from a health savings account.

K-1: This form reports income or loss from partnerships, S-corporations, estates or trusts.

Business (Schedule C):  A summary of business income and expenses is necessary for taxpayers who operate sole proprietorships.  See our article about auto deductions.

Rental Property (Schedule E): A summary of rental income and expenses is necessary to complete this schedule.

Real Estate Transactions: If you bought, sold, or refinanced real property during the year, the escrow company should have provided a Closing Statement, also known as a Settlement Statement or HUD-1 Statement.  These transactions may have tax implications, so it is important to provide the closing statements to your tax preparer.

Other Income: Any other income received during the year is probably taxable and should be reported on your tax return, even if you did not receive a form.  If you are not sure whether something is taxable, ask your tax return preparer.

Deductions:

1098-E: Reports student loan interest paid.

Moving Expenses: Certain moving expenses may be deductible depending on the distance and purpose of the move.

Medical Expenses: These include medical, dental, vision, health and long-term care insurance premiums.  Over the counter items are not deductible.  It is important to note that medical expenses must be significant to make an impact on an individual’s tax return, as only those expenses above 10% (7.5% if you’re over 65) of adjusted gross income may be deducted.  Self-employed individuals, however, may deduct the entire amount of their health insurance premiums as a business expense.  IRS Publication 502 provides detailed information about what qualifies as a medical expense.

Taxes Paid: Foreign, Local, or State Income taxes; Real Estate Taxes; Personal Property Taxes; State and Local Sales Taxes (particularly for large ticket items, such as vehicles or home improvement materials); and motor vehicle taxes.

Form 1098: This reports the amount of mortgage interest paid during the year, which may be taken as an itemized deduction.

Charitable Contributions: See our article about this topic.

Miscellaneous Deductions: Several other items may be listed as itemized deductions on the Schedule A.   These include:

  • Unreimbursed employee expenses, such as travel, education, required uniforms or equipment
  • Union dues
  • Investment expenses
  • Tax preparation fees

Credits

Child Care Credit: You may be able to claim this credit depending on the age of the children and your employment status.  To claim the credit, you must provide the names, addresses, and employer identification numbers or social security numbers of the providers, and the amounts paid.  If the child care provider will not provide receipts, you cannot claim the credit.

Qualified Higher Education Expenses: Tuition and fees paid are reported to the taxpayer on a form 1098-T.  There are several different education credits and deductions available.  Depending on which credit the taxpayer is eligible to take, books, equipment, and materials may also qualify.  Educational institutions frequently prepare these forms incorrectly, so check the amounts reported against your own record of tuition and fees paid.

Health Care

Proof of Health Insurance: This comes from the marketplace, other insurers, or employer that provides the health care for the individual. Generally it will come as either a 1095-A, 1095-B, or 1095-C. Bringing one of these forms is important as a part of the Affordable Care Act which requires all individuals to have at least the minimum essential coverage otherwise a tax penalty may occur. If you received a 1095-A you may be eligible for the Premium Tax Credit.

There may be other income, deductions, or credits that apply to taxpayers with unique or unusual circumstances.  This list includes the most common.  If you have questions about whether certain tax provisions apply to you, do not hesitate to contact your tax professional.

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