5 Documents You Need for Your Own Tax Preparation
Are you ready to prepare your own taxes? More people are joining the 43 million Americans who choose to prepare their taxes themselves. Tax software has made the process much easier.
Before you begin the process of paying taxes, you’ll need to get your paperwork together. This is often the most challenging part.
Read on to learn the top documents you need for tax preparation.
- Income Statements
You have to start your tax preparation with the amount of money you made during the year. That includes employment earnings on a W-2 form, interest and investment earnings, and self-employed income.
What if you have a 1099-MISC and a W-2? Do you have to file separate returns? It’s more common for people to have a regular job and a side gig. ThePayStubs goes over how to file taxes if you’re in this situation.
Next up are your expenses. Your income subtracted by your expenses is your Adjusted Gross Income. That’s the amount that’s used to figure out how much you pay in income taxes.
If you’re self-employed or had income from a side-gig, you can deduct business expenses. Car mileage, advertising, office expenses, and any business-related expense can be deducted. You need to have receipts and proper documentation for these deductions.
If you’re a homeowner, you’ll want to gather your property tax and mortgage documents. Mortgage interest and property taxes may be eligible for deductions.
- Student Loan Statements
Did you pay student loan interest during the year? You can deduct up to $2500 in interest payments on your student loans.
That can be a huge difference in your taxes, even resulting in a nice refund. Look for form 1098-E from your student loan provider. This will show how much you paid in student loan payments and how much was in interest.
- Health Care Statements
Di you get health insurance through the Healthcare Exchange? You’ll get form 1095-A that will show you how much you received in tax credits. The tax credits received were based on your predicted income for the year, which you put on your application.
You need to reconcile your earnings with your tax credits. If you made more than you estimated, you will owe in taxes to pay that tax credit back. If you made less than what you estimated, you could get money back.
You’ll also want to gather your receipts for payments made for doctor’s visits, dentists, and hospitals.
- Charitable Deductions
Did you make donations throughout the year? If you itemize your tax deductions, you’ll want to gather these receipts. Charities usually send out end of year notices saying how much you gave for the year.
Get Ready for Tax Preparation
Taxes are never fun to do. You can make tax preparation go smoothly by getting your paperwork together before you begin. You don’t want to miss any opportunities to lower your taxes.
You need all of your income statements, interest earnings, and investment earnings. You’ll also need to know how much you paid for healthcare, student loans, taxes, and business expenses.
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