It’s time to start thinking about your taxes as the end of the year approaches. While there’s no need to be concerned, there are a few things to consider as you prepare to file.
Everything an individual needs to do is prepare a tax planning checklist. You can do it yourself or you can also hire a professional.
Here in this article, we will share the tax prep checklist you need to know so continue reading this article.
Top 5 of Tax Prep Checklist to Be Known:
1. Get your Identification Documents ready
The state taxation authorities use your personal information to determine who is filing a return, how to contact you, and where to deposit your tax refund.
- Your proper legal name, as it appears on your Social Security card
- Year of birth.
- Social security number.
- Address of your residence.
- A copy of your federal and state tax returns from the previous year.
- Your bank account number to receive a refund.
2. Income Information
Collect all documentation that shows the funds you got the previous year.
Review the tax information to confirm that the amounts are reported correctly in your accounts. If you find any errors in your income information then correct them as quickly as possible.
The employed person will need Forms W-2 while unemployed will need Unemployment (1099-G). If you are self-employed then please gather the following information:-
To check amounts not reported on 1099-MISC or new 1099-NEC, use Forms 1099, Schedules K-1, and income records.\
Check registers or credit card statements, as well as receipts, should be kept for all expenses.
Depreciation information for business-use assets (cost, date placed in operation, etc.).
Get Form 1040 ES. It is a record of anticipated tax payments made.
3. Types of Deductions
Deductions can lower your taxable income and increase your refund by lowering the amount of tax you owe. In general, you can either take the standard deduction or itemize your deductions. If you itemize your deductions, you’ll need information on the following:
- Receipts for medical expenditures.
- Form 1098 (Mortgage Interest Record), property tax paperwork, and charges related to energy-saving upgrades are among the principal residence papers.
- Receipt for child care expenses.
- Receipts for charitable contributions.
- Expenses associated with any rental assets.
4. Company financial statements
If your client owns a business, you must request that they furnish you with their financial records. As a result, request the following documents from them.
Profit and loss statement of the business.
Business balance sheet.
5. Expected Tax Payments
This is yet another item on your to-do list to guarantee a good tax day. If you make any estimated tax payments to the IRS (Internal Revenue Service) during the current fiscal year, you must provide it as well.