Tax Time Tips

Whether you are planning to do your own, or hire a pro, you are probably getting ready to file your tax return soon. You may wonder why you need to file a tax return. Think of your return like this, you probably made money from a few different sources (income) last year. You probably paid some tax along the way (withholding). You probably get some tax breaks (deductions). Your tax return adds up the income, subtracts off your deductions and determines how much tax you owe. This amount is compared to what you paid throughout the year. If you paid too much, you get a refund. If you didn’t pay enough, you have an amount due.

As you assemble your documents, it can be helpful to understand what documents you should be looking for and how they tell the story of your prior year.

Income Forms

If you are an employee of a company:

If you are employed, you will likely get a W-2. This form reports how much you made, taxes withheld and voluntary deductions such as health insurance and retirement savings.

If you work for yourself:

1099-NEC is issued to those who work as consultants, independent contractors and those who take temporary assignments such as traveling health professionals.

If you have bank accounts, investments or cashed savings bonds:

If you have savings, be on the lookout for several different 1099 forms. 1099-INT reports interest earned. 1099-DIV reports dividends earned. 1099-B reports stock sales. 1099 Composite is a combination of 1099-B and 1099-DIV. These are commonly associated with checking, savings, and brokerage accounts. 1099-R reports income that comes from retirement accounts such as IRA’s and pensions. Note that if you rolled over a 401k to an IRA, you may receive a 1099-R even though you did not have a taxable event.

If you are disabled or retired:

If you are receiving Social Security payment in retirement, due to disability or as a survivor’s benefit, you will receive a SSA-1099.

If you were unemployed:

If you received unemployment benefits, you should expect a 1099-G.

If you were a lucky winner

If you won money or a prize as the result of a contest or gambling, you should expect to receive a 1099-MISC or W2G.

Deduction/Credit Forms

Forms for Homeowners

1098 reports mortgage Interest, Property Tax Bill.

Education

If you have a student with college tuition, their school will issue a 1098-T.

Dependent Care

If you have a child or qualified dependent in daycare or other dependent care, be sure to get a receipt from your provider that includes the EIN/Social Security number of the care provider.

Renters

Rent payments can be used as a deduction or used towards a credit on some state tax returns. In some cases, you may need a rent certificate from your landlord.

Charitable Donations

Due to the increased standard deduction, most people will not be able to use charitable donations on their federal return however, your state may offer some tax benefits for donations.

Help for Those in Need

If you have tax questions or need help preparing your taxes, but are unable to pay for help, check out resources in your community that aid low-income individuals, disabled and retired people in navigating simple tax returns at low or no cost. Organizations like Goodwill, VITA and AARP have volunteers on hand who have tax knowledge and can help those in need.

Final Thoughts

Many people find tax season to be stressful. Keep in mind that with a little up-front organization, tax season can be a breeze. Before gathering your documents for this year’s return, you may find it helpful to review last year’s return to see what forms you had last year. Use this year’s completed return as a planning tool for the year ahead. If you owed too much money or got too much back, consider adjusting your withholding. If you have deductions that you will lose in the coming year, you may also need to change your withholding. Small changes early in the year can help you avoid the unexpected next year.

Rebecca Agamaite Investment Advisor Representative  Rebecca joined the firm in 2011 as an Investment Advisor Representative. In this role, she works with clients to manage their investment assets and help them obtain their financial objectives. Rebecca brings a great deal of experience to the team having worked for several years at Marshall & IIsley Bank and MetLife. She earned a Masters of Business Administration degree (with an emphasis on finance) from Concordia University.

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