Now that the new year has come and gone, millions of Americans are getting prepared for tax season. While it's not everyone's favorite time of year, it is a necessary one. Failing to file your taxes annually could result in late fees or other penalties. The best way to ensure you accomplish this task on time and correctly is to get prepared early. Plus, the sooner you get your taxes done, the quicker the weight is lifted off your shoulders - and the faster your return check is put in the mail or bank account.
Figuring everything out can be complicated and gathering all the paperwork can be time-consuming. There are several different types of items you'll need to accurately file your taxes. Be sure to keep everything organized so getting this done is as uncomplicated as possible.
First, you need your personal information and that of anyone you are filing with or claiming. For instance, if you are filing jointly with your spouse, you'll need his or her Social Security number. You'll also need your children's Social Security or tax ID numbers. Plus, Bankrate points out if you have kids you send to a child care center, it's also important to have information about the center so you can file for child care credit .
Employment and income
Next, it's important to have all information regarding the income you made in 2015. This can be through an employer, unemployment, self-employment or investment properties, as H&R Block listed . If you worked at several different businesses in the past year, you will need W-2s from each of them. It is expected that everyone have theirs by the end of January, so if you don't, be sure to reach out to your current or former boss. If you received income in other ways, you will need other forms:
- 1099-MISC for self-employment
- 1099-G for unemployment
- 1099-R for pension, annuity or IRA income
- Records for rental property information, including income and expenses, as well as asset information to calculate depreciation
Banks and investments
Just as your employers are expected to send you a W-2, the institutions where your money is being kept are also expected to send you statements around this time of year. Interest earnings are considered taxable income, so these statements are important to include when filing your taxes. You'll also need to have a record of any income you made through stocks or other investments.
Receipts and charity
There are plenty of things that are tax-deductible that people might overlook when filing their taxes. H&R Block named several expenses related to your job as deductibles:
- Job hunting expenses, including travel and food
- Uniform cleaning
- Business-related travel
- Industry publications
- Classroom expenses made by teachers for kindergarten through 12th grade
- Moving expenses not reimbursed by your employer
All of those charitable contributions you made throughout the year will benefit you now, including:
- Donations made at places of worship
- Travel expenses for charitable purposes
- Donations made to schools
- Any non-cash donations made
Be sure to keep track of medical expenses you made throughout the year, too . Some of them can be deductible, according to the IRS, such as:
- Contact lenses
- Drug addiction therapy
- Eye exams
Be sure you know the expenses you made this year that can be tax deductible and keep the receipts.
All of these forms and receipts can pile up once you start collecting them. To keep them together, designate a particular place in your home for safekeeping. Or, use an app like Dropbox or Evernote to keep electronic copies of them, which are kept in the cloud and accessible on your phone at all times.
. 7 ways to get organized for the tax year
. Personal Tax Prep Checklist
. Publication 502: Medical and Dental Expenses (including the Health Coverage Tax Credit)