As we coast along in 2016, it’s only a matter of time before Tax Day approaches once again.
There’s a little bit of good news that follows that statement: Whereas they’re typically due on April 15, this year, taxes are not due until Monday, April 18.
You can file your taxes on your own, using a service like TurboTax. Depending on your financial situation, it could be relatively easy to do — the software, while tricky at times, is rather intuitive.
But if your taxes are complicated — let’s say you own a home, have some investments and freelance on top of your full-time job — you’re probably better off contracting the services of a professional accountant to file your taxes on your behalf. In doing so, you get the peace of mind that comes from knowing, without a doubt, your taxes were prepared correctly.
Whichever path you choose to take, you’re going to need to locate everything on this tax checklist to prepare your taxes this year:
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Your tax return from last year.
With your return from last year in hand, you or your accountant will be able to quickly see which deductions you had last year. Many of those will likely apply to the 2015 tax year, too.
If you choose to use an accountant this year and didn’t use one last year, the professional may be able to find additional deductions you didn’t take in previous years.
Translation: You may be owed money from the federal government for overpaying in recent years. Look into it.
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Your W2 from your current employer.
If you work a full-time gig, you should receive a W2 in the mail from your employer by the end of January. This document will show you how much income you grossed, as well as how many taxes and deductions — e.g., health insurance or 401k contributions — apply to you.
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Any 1099 forms you may have for contracted work.
Did you do any freelance work on the side last year? If so, your employer should send you a 1099 tax form indicating how much revenue you earned. You’ll need that information to file your taxes correctly.
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Your interest and dividend forms.
If you’re an investor, you should have received forms from your financial management company, like Fidelity or Schwab, indicating how much money you received in dividend payments over the previous calendar year.
And if you have a savings account, your bank will send you a statement indicating how much interest you received over the course of the year.
Both documents are critical for tax preparation.
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Any forms relating to capital gains and/or your IRA.
If you sold stocks last year and made money on them, you’ll have to pay associated capital gains taxes.
You’re also able to deduct any contributions made to an IRA. In 2015, you’re allowed to contribute up to $5,500 to such a retirement account.
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The amount of student loan interest you paid.
Still paying off your student loans? You wouldn’t be alone.
Here’s some good news: You can deduct the amount of interest you paid on your loans in 2015.
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Mortgage expenses.
If you own a home, you can deduct the interest paid on your mortgage expenses from your taxes.
But who are we kidding? You’re a millennial, so you probably don’t own a home.
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Your property tax payments.
You’re also able to deduct any property taxes you paid. Those are generally paid on the home you don’t own, as well as any cars or boats you might own.
The above list is by no means all-inclusive. Different people will need different documents depending on their working situation.
For example, if you have a Health Savings Account, you’ll need Form 8889 and Form 1099-SA. And if you’re self-employed, you’ll need to add all of your health insurance premiums together. Generally speaking, those will be fully deductible.
Now that you know what you need, it’s time to jump right in and do your taxes. Don’t wait until the last minute — and good luck!
Image via: Taxes – Illustration via photopin (license)
1 Comment
People should always check free file on irs.gov. A lot of people would be surprised to find out they qualify for free returns. Some aren’t even income based, I think. If you *are* going to pay, go through a cash back site.
Unfortunately, S-corp taxes are due a month earlier than individual ones. So I have to make sure I have everything in order for that. Once I have the final numbers from there, I can complete our 1040.