Many people put off dealing with their tax information because it can feel overwhelming. Starting early, being organized, and staying in-touch with your tax professional throughout the year are easy ways to avoid the last-minute headache of tax preparation. Here are some tips and information to help you have a successful tax season.
Gather Important Information & Tax Documents
For about a month, you have probably been receiving tax documents in the mail that you’ve simply been throwing in a pile. Now is the time to gather them together and organize them. You may have documents such as:
- Form W-2: These are issued by employers and show your wages and tax withholdings. They are supposed to be mailed by January 31.
- Form 1099-MISC: These report income you have received as an independent contractor or freelancer. You should receive one from each person or company that pays you.
- Form 1099-INT: This form will show any interest you have earned.
- Form 1099-R: This form reports income received from annuities, IRAs, or pensions.
- Form 1099-DIV: Any dividend income you earn is reported on this form.
- Form 1099-B or 1099-S: You will receive these if you have any income from the sale of property or stock.
- Form 1098: You will get this from your mortgage company reporting the interest that you paid.
- Form 1098-T: This reports payments of qualified tuition and expenses.
- Form 1095-A or 1095-C: These forms report your healthcare coverage for the year and your premium tax credit, if applicable.
In addition to your tax forms, make sure that you have all of your and your dependents’ personal information available. You will need things like Social Security numbers and dates of birth. Also, if you itemize your deductions, start gathering your receipts for healthcare expenses, charitable contributions, and records of your taxes and interest paid.
Review Last Year’s Return
Looking over your 2018 tax return is a good way to get a sense of what you will need to file your 2019 tax return. Make sure you have statements for all the accounts and investments you included on last year’s return. This will also remind you of any special deductions or credits that you may be eligible for. If you’re working with a new tax professional this year, providing them with a copy of your 2018 return will make your 2019 return quicker and easier for them.
Consider Any Changes
While it’s helpful to look over last year’s return, you also need to take into consideration any changes that have occurred over the past year. Did you add another child to your family? Did one of your children start college? Did you start taking withdrawals from a retirement account? All of these changes need to be reflected on your tax return but won’t show up on prior returns.
More than personal changes, there may be changes to federal or state tax law that you should be aware of. The Tax Cuts & Jobs Act tax reform bill of 2017 is still being implemented and the new SECURE Act could also affect your 2019 tax situation. Your Paracle team is here to help you think through and plan for how these changes may impact your financial situation.
Plan For The Future
While it’s important to get your 2019 tax return filed properly, it’s just as important to look at the bigger picture of taxes in general. Are you optimizing all of the tools available to you to limit your tax liability? Are there steps that you could take now to minimize future taxes? Do you have a plan for your tax refund that will further your overall financial goals?
Taxes are complicated, to put it lightly, so it helps to work with a professional who understands them if you want to maximize the opportunities available. Our team at Paracle would love to meet you to help you experience confidence in every aspect of your financial plan so you can focus on what matters most. Email firstname.lastname@example.org or call 206.466.6200 to get started.
Paracle Personal Financial Management is an independent financial planning firm founded in 2004 with an honest desire to help people optimize their finances by providing unbiased financial planning and investment advice that puts their clients first. Paracle specializes in delivering expert, comprehensive wealth management services to busy families. Their expertise integrates financial planning with investment management to ensure their clients experience confidence in every aspect of their plan so they can focus on what matters most. To learn more about Paracle, connect with them on LinkedIn.