Tax Prep Checklist

It’s the month of January, a new year and most are excited that it’s tax season.  Taxpayers are anxious to file in anticipation for their refund checks, which represents and overpayment of income taxes.

Well, before you begin the process, there are a few basics to consider.  It is important to adequately prepare so as to avoid the headache of having to amend the return later or worst off, miss out on key deductions and credits.

Here are a list of items to consider as you get ready to file:

Individual Filers

1. Tax ID Numbers – Make sure you have a valid SS, ITIN, ATIN number for yourself and all dependents.
2. Income – If you held more than one job for the year, be certain that you have all W-2 forms or 1099’s before filing.
3. Informational Forms – These are your mortgage statements, investment earnings, student loan, interest income and other statements for earnings and payments.
4. Prior Year Return – Have a copy of last year’s return to capture key information.
5. Childcare – If you paid for services, have the tax ID number of the care provider.
6. Charitable Contributions – Have you donated to charity? Have your receipts and statements. (bank statements, church tithe statements, etc)
7. Cryptocurrency – If you have traded in Bitcoin or other virtual currency, you will need to report any gains or losses. (New question on form 1040 for 2020)
8. Rental Income – You may not be a real estate but do have your profit & loss statement.
9. New Home Purchase – For first-time homebuyers, have your documents ready.
10. Medical Expenses – If you have major expenses above 7.5% of AGI, you can deduct.

Business Owners

1. Close the Books – Analyze and reconcile the general ledger accounts and make the necessary adjustments.
2. Income & Expenses – Ensure that source documents are in order to support all items of business transactions.  Also, be certain that they are accurately classified.
3. Tax ID Number – If you hire employees, be certain to obtain an EIN# for your business.
4. Mileage Logs – If you use your vehicle for business, this will assist you to claim a deduction. An accurate record of trips should be kept.
5. Business Assets – If you are claiming 179 deductions or have assets to depreciate, have your list and the asset values ready.

There may be other areas or items of preparation needed as each taxpayer’s situation may be a bit different. You may want to work with your tax professional and ask key questions that will allow the process to go smoothly.  Based on how prepared you are as a taxpayer, will make the difference so do as much as you can beforehand.

The IRS is offering tips to taxpayers on how to get prepared for the tax filing season. Click on the link below to learn more.

https://go.usa.gov/x7hPP

About The Author:

Sherma Lisa Stewart, MBA, EA, is the Founder of SLS Accounting & Business Consulting Services, which offers Accounting & Bookkeeping; Tax Services; Business Advisory and Financial Planning. 

Ms. Stewart is a graduate of Monroe College. She received her BBA in Accounting,  then went on to pursue her graduate education at the King Graduate School of Business, attaining her MBA in Business Management.  She is an Enrolled Agent (credentialed to practice and represent tax clients before the IRS)

SLS Accounting & Business Consulting Services is ready to file your Income Tax returns.  Visit our website for contact information (https://slsaccountingsvcs.com/contact) and schedule an appointment.