We are already into the second month of 2018, which means you should stay pretentious about the tax reforms of this year which are believed to be the fate-changing reforms in the United States history. With the advent of Donald Trump, various modifications were made to the strategies and other aspects of the finances.
Now, just as April 17th is declared as the deadline, we wish to tell you that you must be pretty well prepared on filing the tax returns so that you don’t have to rush your way through the deadlines. To proceed with the filing, you have to bring together all of your 2017 documents.
In order to claim all the credits and deductions, you have to gather the mandatory documents which means that it is obviously the better to start early. If properly done, you can even claim your tax refund sooner and better.
1. The Documents Needed For Filing
The Personal Identification
Social Security Number (SSN), gather the numbers of all your family members
Get the Individual Tax Identification Number if you don’t own an SSN
Get your W-2 Forms for 2017
1. If you have children, then gather the receipts of fees paid to the daycare center or preschooler.
2. Total wages paid to the babysitter
1. The proof of cash amounts you have donated for the schools, religious places or the charities.
2. If money was not donated, then get a document of non-cash donations.
3. Mileage driven for the charitable reasons.
Medical & Health Expenses
1. Save the legal receipts of the total amount paid for the healthcare insurances and other expenses.
2. If you are enrolled in an insurance plan through the market, then get your 1095-A form, if done through any other source, then get the 1095-B form.
3. Also, get your Marketplace exemption certificate (ECN) if you applied for and received an exemption from the same.
1. If this is your case, then grab your ‘1099-MISC’ form along with the ‘Schedule K-1‘.
2. There might be a situation in which your income records are not mentioned on the 1099-MISC, if that is the case, then get the separate records.
3. Your home office expenditure during the whole financial year.
4. ‘Assets used for the business’ information, along with all expenses invested in the self-employment business.
1. This includes the total cash amount you contributed and the value of your retirement account, dated Dec 31st, 2017.
2. The Pensions, IRA, and other income which comes under the 1099-R form.
3. The social security income granted.
1. All the concerned documents of income and expenses involved.
2. Value of the total assets, as per the depreciation.
The Local and State Taxes Or Sales Tax
1. Income tax paid to the concerned organizations at both state and local level.
2. The cash paid as the vehicle sales tax should be included.
Information about Finances
1. The routing number and the bank account along with proper proof.
2. A statement representing the total list of taxes you paid which includes property taxes, state and local taxes and any estimated taxes
1. 1098-T form from your educational institution.
2. Records of the scholarships and fellowships you received, if any.
3. The list of educational expenses which might include books, reference materials or projects.
4. Educational loan interest you paid in college.
1. All the vehicle-expenses like tolls, gas, license, mileage, maintenance, property tax, interest expense and parking come under this.
2. Exclusively for the educators in grades K-12, receipts of the classroom can be submitted.
3. Other expenses like publications, dues, tools, uniform cost, cleaning, and travel.
4. The total moving expenses paid by the employee, if not reimbursed by the employer.
5. Those who got the job in 2017, can submit the job hunting expenses too.
2. Make A Checklist
Never try doing this hectic task orally, make a list, and check out all the documents you gathered. After all, organizing the required documents is the most important task, and make sure you won’t miss any of them.
3. Prefer Electronic Process
We suggest you go with the online procedure, because, the recent reports from the IRS said that the possibility of errors in the paper tax returns stands around 21 percent or more. Contrary to that, the errors in the electronic process are less than 1 percent, which is negligible.
To get your money faster, you should proceed with the electronic procedure. It takes a maximum of three weeks to get your returns through online, but, the same happens in six to eight weeks if you opt for the traditional procedure.
4. Hiring A Tax Consultant?
a. If you are such kind of person who has a transparent tax situation having no dependents, investments, significant assets or charitable contributions and not even an own business, then, you should go with the basic, free versions of tax preparation software.
Plan some productive time, collect your documents, sit and start filing. The recent survey conducted by the IRS stated that you need barely a day or at least 16 hours to complete the process with basic 1040 form.
b. If your yearly turnover crosses the margin of $200,000 USD and you have dependents, significant assets, and the charitable expenses, or maybe just your own business, then opt for a good tax consultant.
Or if you just have no time to deal with this, and wish to itemize your deductions all at once, well, start searching for a consultant.
5. What If The Forms Arrive Late?
If things go wrong on the other side of the bank, then you have every right to proceed against them legally. If you didn’t receive the form before the deadline, you can get in touch with the employer or the respective financial institution which was responsible to accomplish that task for you.
In case if the filing wasn’t done in a timely manner, the institutions to which we are assigned to will pay the penalties charged by the IRS.
Keep in mind, the most happening, and the brutal mistake you could ever commit is not reporting the income you know just as you didn’t get a tax form reflecting the same. If this is done unintentionally or intentionally, sooner or later, the IRS will somehow find out the income you received. So, we suggest you pay attention to the total windows of income throughout the year, cross-check if you opted for some minor or major loan at lending sites such as ‘loan shop‘ etc. If not dealt properly you might end up tagged with a red flag which sometimes leads to an audit.