Year-end Planning Tips - 10/10 - New Year's resolutions

At this time of year everyone is consumed with reflections of 2013 and resolutions in an effort to make avoid past mistakes in the New Year.  And for others just simply trying to do better.  For those needing to get a better handle on their finances and taxes it is a good time to put your records in order to facilitate a less stressful tax time. 

Ensuring that you are not paying more in taxes than you need to is an essential part of wealth accumulation and wealth management.  To do this properly gathering all relevant documents is important.  Over the next month or two you will be receiving tax information in the mail detailing your income for 2013.  Having your prior year's tax return is a good guidance on what you need but if using the services of a new tax professional then giving copies of the last three years will be more beneficial for a thorough review.

Below is a checklist you can use for guidance when putting your information together.  You can use different files for each category. Envelopes or paperclips will work just as well in keeping each category separate for ease of review. While this may not cover everything you may need but it is a good start.

Tax Preparation for Personal Information
Depending on your filing status (single; married filing jointly; head of household)  the IRS requires you include the full details of all individual included in your tax return.  Dates of birth are also essential for certain credits and deductions.  To make this easy, they require:

• Your Social Security number
• Your spouse’s Social Security number (if married)
• Social Security numbers for any dependents

Tax Preparation for Income Information
The following documents will help you prepare all the income information that you need to file a federal tax return:

• W-2 Forms from all employers you (and your spouse, if filing a joint return) worked for during the past tax year.
• 1099 Forms if you (or your spouse) completed contract work and earned more than $600.
• Investment income information (including: interest income, dividend income, proceeds from the sale of bonds or stocks, and income from foreign investments).
• Income from local and state tax refunds from the prior year.
• Business income (accounting records for any business that you own)
• Unemployment income
• Rental property income
• Social Security benefits
• Miscellaneous income (including: jury duty, lottery and gambling winnings, Form 1099-MISC for prizes and awards, and Form 1099-MSA for distributions from medical savings accounts)

Tax Preparation for Income Adjustments
The following adjustments can help reduce how much you owe in taxes, and in turn, increase your chance of receiving a tax refund:

• Homebuyer tax credit
• Green energy credits
• IRA contributions
• Mortgage interest
• Student loan interest
• Medical Savings Account (MSA) contributions
• Self-employed health insurance
• Moving expenses

Tax Preparation for Credits and Deductions
There are many tax credits and tax deductions for various expenses, which are designed to help lower the amount of tax that an individual has to pay:

• Education costs
• Childcare costs
• Adoption costs
• Charitable contributions/donations
• Casualty and theft losses
• Qualified business expenses
• Medical expenses
• Job and moving expenses

Tax Preparation for Direct Deposit
Are you interested in having your tax refund directly deposited into your bank account? If so, you will need to provide two things:

• Your bank account number
• The bank’s routing number

This tax forms / preparation checklist should help you get organized before filing your next income tax return.