Can you believe we are already nearly an entire month into 2017? Have you organized your home? Cleaned out your closets? Set up your budget for 2017? There are so many different ways everyone likes to kick off a new year, but for me as a C.P.A., the new year signifies something else — tax season!
While most people don’t like thinking about taxes, it is crucial to be prepared early on so you don’t get caught having to gather your information at the last minute. Use this checklist to kickstart your tax prep work for the year:
- CREATE A FOLDER. Ideally, you have had a file folder or something similar throughout 2016 that holds any relevant tax information for the year. If you made any cash or non-cash contributions, sold stock or have received anything related to your taxes for 2016, these items should be accumulating throughout the year in this folder.
- GATHER 2016 TAX DOCUMENTS. Pretty soon, if not already, you will start receiving W-2s, 1099s (interest, dividends, miscellaneous income, etc.), 1098s (mortgage interest, student loan interest, etc.) or other tax documents. Add these items to your 2016 tax folder. If you are still waiting for these items as we get into February, consider calling the institution or downloading the correct form from their website.
- RENTAL PROPERTIES/SELF-EMPLOYED BUSINESSES. If you own rental properties or are self-employed, take some time now to gather your 2016 income and expenses related to these items. Perhaps you have been keeping track throughout the year (ideally so you do not miss out on expenses that you may have forgotten), but if you haven’t, it is imperative that you gather the information as soon as you can. Us moms have to keep track of a lot of things, and as the months tick by closer to the middle of April, those expenses will be further and further away from our minds. If you are like me, then you would hate to lose out on any and all deductions!
- ORGANIZE AND COMPARE. If you have a tax professional that provides you with an organizer tool, use it to gather your items together and make sure you are not missing anything. You can also look back at your 2015 return to see what items were being reported there. This is a great place to refer to as you are gathering your items. It can help remind you of the 1099 you haven’t received yet or that you were able to claim the dependent care credit in 2015. Do you have the same options for 2016?
- THINK AND REFLECT. What was different in 2016? Did you start a new company, purchase a house, buy a car, or move to a different state? Many things could have happened in 2016 that are new and not on your 2015 return that could affect your 2016 return.
- RETIREMENT. Did you contribute to an IRA in 2016? Do you still want to? Some retirement vehicles allow you to contribute for 2016 through the April tax filing deadline.
- PREPARE. Now it is time to prepare the return. If you are preparing it on your own, put on a movie for the kids, grab a glass of wine and get to work! If you use a tax professional, you are ready pass it on to get the return completed. Hey, you can still have a glass of wine, too!
- ASK. If you aren’t sure about items that can or cannot be deducted or whether or not income needs to be reported, ask your tax professional. They are there to help. Another great tool is irs.gov. This may seem self-explanatory, but many do not think to go there for information.
This list can help get you going so you don’t have your tax return hanging over your head. And who knows, you could be getting a refund, and who wants to wait for that?