As we approach the end of 2017, tax time is around the corner. The changes of the Trump Tax Plan and the post card tax return will happen in 2018. So, we have another year of the old rules and forms. While taxes can be really complicated, getting your taxes done can be a breeze, you just need to hold on to a few pieces of paper and be prepared to answer a few questions for your accountant. Here are few tips for making sure this tax season is pain-free.
- Form Numbers Are Your Friend! Trying to decide what to hold on to for your tax return can be overwhelming. Many times, tax preparers will get a stack of every piece of paper that has a number and a dollar sign on it. While we do appreciate detail, we also appreciate getting you a return as quickly as possible! The most important tax documents will have a form number. These are the most important things to hold onto. If you get something in the mail that says “Tax Document” on the envelope, chances are it is a form of some variety and it should be kept.
- The Many Faces of 1099s. 1099s come in all shapes and sizes. The type will be designated by either a letter or a word added on to the end. For example, a 1099 that tells you how much money you earned in bank interest is a “1099-INT”. The most common type is a 1099-MISC, or Miscellaneous. This is typically used to show money made as a subcontractor, or someone who wasn’t having taxes taken out of their earnings. If you receive any form of 1099, hold on to it. You will need to report it on your tax return.
- Do you C? If you run your own business as a sole proprietor, you don’t need to file a separate return. You do, however, need to fill out a Schedule C on your individual tax return. The Schedule C, Profit or Loss From Business, requires your yearly numbers pertaining to income and expenses. Completing this schedule will be much easier if you have a bookkeeper. A bookkeeper will track your income and expenses by type, often corresponding with the required fields on the Schedule C. If you do not have a bookkeeper, and have not been tracking your expenses, you will have to provide your company’s bank and credit card statements for the year.
- The Venerable W-2. Chances are, you will receive this in January or February. In short, the W-2 shows you how much you made, and how much was taken out for Federal taxes, Social Security and Medicare, and State Taxes (if applicable). It will also show you how much was taken out for any sort of health plan, or dependent care, along with several other items if they pertain to you. The W-2 is the backbone of your tax return. You should receive one from any job you worked at over the course of the year in which you were officially on a payroll. Basically, if you filled out a W-4, you will receive a W-2.
Filing your taxes doesn’t need to be some mystery. More than anything, it is about being prepared, and following instructions. Well, and having a great deal of patience. But as long as you have everything you need, and are willing to take the time to read items over, you will be able to file your taxes without any major hiccups.