By Bill Reiner, CFP®, ChFC®

No one enjoys tax season. In fact, in a recent poll, 20% of people said they were willing to get an IRS tattoo somewhere on their body in return for never having to do a tax return again. (1) That’s pretty drastic! But while completing your return can be a chore, the sooner you get organized, the sooner you can shake off that stress and spend your time doing what you love instead. We have created a checklist of all the documents you need to have a smooth tax season. (Keep in mind: Due to the pandemic and stimulus payments, the federal government’s tax filing season for individual earners will start on February 12, 2021, as opposed to beginning in late January as it has in past years.) (2)

Gather Your Personal & Income Information

You will probably start receiving various tax documents soon. Be sure to check on accounts where you have made paperless elections; for those accounts, you may need to download documents instead of receiving them by mail. Consider creating an organized system for the following:

Income Information

  • Form W-2: These are issued by employers and show your wages and tax withholdings. They are supposed to be mailed by January 31.
  • Form 1099-MISC: These report income you have received as an independent contractor or freelancer. You should receive one from each person or company that pays you.
  • Form 1099-INT: This form will show any interest you have earned.
  • Form 1099-R: This form reports income received from annuities, IRAs, or pensions.
  • Form 1099-DIV: Any dividend income you earn is reported on this form.
  • Form 1099-B or 1099-S: You will receive these if you have any income from the sale of property or stock.
  • Form 1098: You will get this from your mortgage company reporting the interest that you paid.
  • Form 1098-T: This reports payments of qualified tuition and expenses.
  • Form 1095-A or 1095-C: These forms report your healthcare coverage for the year and your premium tax credit, if applicable.
  • Schedule K-1 (Form 1065, Form 1120S, or Form 1041): This reports income for a partner, a shareholder, or an income beneficiary of an estate or trust. The Schedule K-1 normal deadline can be as late as April 15th. 

Income-Reduction Documents

  • Form 1098-E for student loan interest paid, or loan statements for student loans received
  • Form 1098-T for tuition paid or receipts from the institution you or your dependents attend
  • Receipts for any qualifying energy-efficient home improvements
  • Records of IRA contributions made during the year
  • SEP, SIMPLE, and other self-employed pension plan information
  • Records of medical savings account (MSA) contributions
  • Moving expense records
  • Self-employed health insurance payment records
  • Alimony you paid

Personal Information

 Be sure that you have all of your and your dependents’ personal information available, such as:

  • Social Security numbers and birth dates
  • Copies of last year’s tax return (helpful, but not required)
  • Bank account number and routing number, if you wish to have your refund deposited directly into your account

Organize Your Documents For Itemization

Also, if you itemize your deductions, you will need records to include your totals and provide proof. 

Deductions And Credits

  • Child care costs: provider’s name, address, tax ID, and the amount paid
  • Education costs: Form 1098-T, education expenses
  • Adoption costs: SSN of the child; records of legal, medical, and transportation costs
  • Form 1098: Mortgage interest, private mortgage insurance (PMI), and points you paid
  • Investment interest expenses
  • Charitable donations: cash amounts and official charity receipts
  • Medical and dental expenses paid
  • Casualty and theft losses: the amount of damage, insurance reimbursements
  • Records/amounts of other miscellaneous tax deductions: union dues; unreimbursed employee expenses (uniforms, supplies, seminars, continuing education, publications, travel, etc.)
  • Records of home business expenses

Taxes Paid

  • State and local income tax
  • Real estate tax
  • Personal property tax

Consider Possible Changes

So this is a comprehensive list of what you’ll need in front of you to thoroughly fill out your tax return. But there are also a few things to think about that could impact how you file, such as any changes that have occurred last year. Did you add another child to your family? Did one of your children start college? Did you start taking withdrawals from a retirement account? These changes need to be reflected on your 2020 tax return despite not appearing on prior returns.

More than personal changes, there may be changes to federal or state tax law that you should be aware of. The Tax Cuts and Jobs Act tax reform bill of 2017 is still being implemented, and the new SECURE Act could also affect your 2020 tax situation. Did you work from home in 2020 due to the pandemic? Were there expenses you incurred that were not reimbursed by your employer? You may want to think through those expenses as they may be deductible along with others.

Changes to retirement plan contribution limits should also be reviewed. For the 2020 tax year, you can put up to $6,000 in any type of IRA. If you are over age 50, that amount goes up to $7,000 thanks to the $1,000 catch-up contribution. Annual contribution limits for 401(k)s, 403(b)s, the federal Thrift Savings Plan, and most 457 plans also increased by $500 for 2020. The new annual limit on contributions is $19,500. If you are 50 or older, your yearly contribution limit goes up to $26,000. And if you are eligible to contribute to an HSA, you can save $3,550 if you have single medical coverage and $7,100 if you are covered under a qualifying family plan. If you are 55 or older, those limits go up another $1,000. Keep in mind that for IRAs and HSAs, you have until April 15th, 2021, to contribute for the 2020 tax year. 

A knowledgeable financial professional can help you understand any tax law changes and how they affect you.

Make A Plan For The Future

Do you know what you will do with your tax refund? Is it built into your budget and financial plan? Is your tax strategy keeping up with your goals and your stage in life? Doing your taxes is a great time to reevaluate your entire tax strategy, one that you can implement all year long and reap the benefits at tax time. 

Our team at Reiner Financial Group is here to help you create a comprehensive plan that takes into account tax strategies. If you have questions about your financial plan or tax strategy or have yet to create one, set up a free 30-minute consultation with us here or reach out to us at (215) 340-2360 or bill@reinerfinancial.com with any questions. 

About Bill Reiner, CFP®, ChFC®, Financial Advisor

Bill has been in the financial industry since 1995, earning numerous professional designations, including the Certified Financial PlannerTM Certification in 1999. Clients work with Bill because of his honesty and unwavering devotion to superior client service. He helps clients discover what financial strategies work best in helping them achieve their goals and objectives. When taking on new clients, he works diligently to gain their trust and help them understand the solutions he recommends.

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(1) https://www.nysscpa.org/news/publications/the-trusted-professional/article/poll-20-percent-would-get-an-irs-tattoo-if-it-meant-not-having-to-pay-taxes-041117

(2) https://www.irs.gov/newsroom/2021-tax-filing-season-begins-feb-12-irs-outlines-steps-to-speed-refunds-during-pandemic