How to Prepare for Tax Season

Income Sources

& Rental Activity

  • For greatest accuracy, business and rental activities should be maintained on accounting software such as Quickbooks.
  • Bank statements should be reconciled for each calendar month to ensure correct income and expense totals.
  • Note any fixed assets on balance sheet for depreciation purposes.
  • Determine if business qualifies to claim home office expenses.
  • Check if there are any net operating loss carryovers from prior tax years to offset current taxable income.
  • Provide your tax preparer with a year-end income statement and balance sheet for your business.
  • If sole proprietorship, business activity will be reported on Schedule C of form 1040.
  • If partnership or s-corporation, business activity will be reported on schedule K-1 and flow through to form 1040 on schedule E, supplemental income/loss.

W-2 Employees

  • Make sure you have received your W-2 form from your employer.
  • If you had multiple employers during the year make sure you’ve received all W-2 forms.
  • Review name, address, social security number, income and tax withheld amounts for accuracy and contact employers if you discover errors.

Other Income

  • 1099-INT forms for interest income
  • 1099-DIV forms for dividend income
  • 1099-G form for tax refunds or unemployment compensation
  • 1099-B forms for proceeds from stock transactions *
  • Schedule K-1 forms for partnership, S-Corporation or other investment income
  • 1099-R forms for pension, annuity, IRA and other retirement investment income
  • W-2G forms for gambling winnings
  • Report of alimony income

* Important note regarding stock transactions: Your brokerage statement should report purchase dates, purchase prices, sales dates, sales amounts and selling expenses. If any of this information is missing , be sure to contact your financial advisor. Capital gains or losses cannot be calculated without complete information.

Adjustments to Income

  • Health or medical savings account statement for contributions and distributions
  • Statements for contributions to accounts such as SEPs, SIMPLE plans and qualified plans
  • Statements for IRA contributions
  • Accounting of alimony payments made
  • 1098-E form for student loan interest paid

Each of these items function similarly to deductions to reduce your adjusted gross income, which is used to determine the deductibility of certain itemized deductions.

Itemized Deductions

  • Medical and dental expenses only if they exceed 10% of adjusted gross income,  7 ½% if age 65 or over
  • Escrow statement if new home purchased during the year
  • 1098 mortgage statement for mortgage interest paid (and real estate taxes and homeowner’s insurance if you have impound account
  • Statements or letters for charitable contributions made in cash or goods
  • If W-2 employee, record of unreimbursed employee business expenses paid such as travel, union dues, education expenses, etc. (Carryovers from prior years may be used.)
  • Record of tax preparation fees, investment expenses, safe deposit box fees, etc.**

** Subject to a 2% floor; deductible amount must exceed 2% of adjusted gross income

Important note: Most taxpayers who are NOT homeowners aren’t able to itemize their deductions. A standard deduction applies in these cases. However, exceptions exist for taxpayers with substantial medical expenses and high income tax payers with a large amount of state and local taxes withheld from their earnings.

Other Documentation

  • Statements from day care providers for child and dependent care expenses
  • 1099 A, B or C forms reporting health exchange subsidies and employer-provided health insurance
  • A record of federal and state estimated tax payments for self-employed people or recipients of extraordinary income