Filing a tax return that is both accurate and yields the optimal savings can be a stressful and burdensome process. Whether working on your own or with a tax professional, the changes in tax laws and the plethora of documents can make the process confusing and leave you wondering whether you are putting the correct information in the correct places. The most useful practice you can utilize to help yourself through this process is to locate and organize your most important tax, wage, and spending documents. If you can follow the steps in this article, it will not only streamline the filing process by providing easy access to all necessary information, it will allow you to provide audit-proof information that leads to greater savings.
Step 1. The first thing you should do when gathering documents is to accumulate your most recent tax documents, as they may provide important personal and financial information that impact the current year.
Step 2. The next step is to gather documents relating to earned money, with a W-2 from your employer and a 1099 from dividend or interest being the most common, while 1099-Bs, 1098s, 1095-As, W-2Gs, SSA-1099s, and K-1s are also necessary. These documents will be important in filing your return, as it will ask for many different figures found on these documents.
Step 3. The next part of this process is assembling your receipts. Assembling all of these, such as payment receipts, credit card statements, and bank statements, can be particularly useful when attempting to itemize your tax deductions for things such as medical expenses, property taxes and investment expenses.
Step 4. The next step you will need to take is to ensure written record of all charitable donations. Proof of the contributions are important in case you are audited.
Step 5. This step is similar to the previous two and is the tracking of travel expenses. It is important to keep a log of all your time and reasons for business travel and the associated expenses, as these expenses are often deductible but closely watched by the IRS.
Step 6. Your final step in organizing tax return documents is to try to recall past experiences you have had with deductions, such as the viability of deducting vacation rental expenses or business use of a home office.