Tax Records Roundup
Taxes: Time to Roundup Those Records
Why think about taxes now? Your tax return isn’t due until April 17, and the IRS won’t even begin accepting tax returns before January 29.
Still, it’s likely you’ll begin receiving the documentation you need for your tax return in the next few weeks, either in the mail or via email online.
Now’s the time to assemble it all in one place, while it’s handy. Here are some key records you’ll need when tax time rolls around:
W-2 (or other income documentation): If you earned a salary in 2017, your employer will send a W-2 in the next few weeks. This reports your annual income and how much tax was withheld. If you’re an independent contractor, you’ll typically receive income reports on Form 1099-MISC. (If you are a sole proprietor, then you are responsible for gathering all of the information related to the profit or loss of your business for a Schedule C attachment.)
Prior tax payments. If you are a salaried worker, your employer has likely withheld taxes. You’ll enter the amount of the federal tax already paid at the end of your tax return, to determine the amount of tax you still owe (or, if you overpaid, how much the government owes you as a tax refund.) Your W-2 will report the total amount of tax you paid during the year – federal taxes as well as state and local.
Investment income. If you receive any investment income, you will typically receive a Form 1099 showing the type and amount of income paid to you. Interest income from investments typically includes interest from savings accounts as well as dividends on any stocks you own. These are reported to you on Form 1099-INT and 1099-DIV.
Tax deductions and credits. Tax deductions lower the amount of your taxable income. If you itemize on your tax return, you’ll likely need receipts or statements to document deductions such as charitable donations or mortgage interest. Tax credits directly reduce the amount of tax you owe. These include child tax credit, residential energy credits and the earned income credit. If you think you may be eligible for any of these, visit IRS.gov now to determine whether you’ll need any additional documentation.
Start a folder on your desk or your computer, and start filing this info as you receive it. That way, if you procrastinate, at least you’ll have what you need at your fingertips when tax time is here.
(And don’t forget about the discount ITCU members can enjoy when they file with TurboTax®: click here to learn more!)