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How to Get Organized for Year-End and Prepare Your Taxes

By Heather Cherry • February 21, 2020


How to Get Organized for Year-End and Prepare Your Taxes

It’s that time of year. When you gather up your income statements, receipts, and tally expenses. As we approach tax season once again, take time to evaluate your year-end checklist to avoid penalties when you get ready to file. Here’s how to get organized for year-end and prepare your taxes:

Review Income and Expenses

Assessing your existing income and budget at year-end is helpful because you’ll know where to apply your tax-refund (if any). It also allows you to be more prepared for estimated tax payments or adjust expenses depending on tax obligations.

Things to think about include:

How did your personal budget measure up to your income for 2019? Were there unexpected expenses? Were you able to accommodate them?

De-clutter File Cabinets

If you rely on filing cabinets for important papers, now is the time to de-clutter and replace any worn out or torn folders and toss unnecessary documents.

If you opt for electronic file storage, sift through and delete unnecessary files.

It’s also a good idea to conduct a backup of your personal files with a backup drive option.

Gather Income and Receipts

You should have received all your tax documentation from employers. If not, follow up to make sure they’re on their way. The Internal Revenue Service (IRS) says W-2 forms should be mailed out to employees no later than January 31 for forms derived from the previous calendar year.

In addition to W-2 forms for all income earners, you’ll need to gather other types of income like self-employed income, alimony, and investments. Here are specific income forms you’ll need to gather for tax preparation: 

  • Income from jobs: W-2 forms for all income earners.
  • Income from investments: 1099-INT, -DIV, -B, or K-1s, stock option information.
  • Completed work as an independent contractor? You’ll need your 1099-MISC forms.
  • Cancellation of debt, form 1099-C
  • Unemployment income, or state or local tax refunds, form 1099-G
  • Income from sale of a property, 1099-S form
  • Retirement information: Social Security benefits received, forms SSA-1099; payments or distributions from IRAs or retirement plans, 1099-R or form 8606. Total value of your retirement accounts at the close of December 31, 2019.
  • Alimony received on applicable divorces finalized before January 1, 2019.
  • Business or farming income – profit/loss statement, capital equipment information
  • Do you have a rental property and earn income? You’ll need the profit/loss statement, suspended loss information, and any related expenses.
  • Prior year installment sale information – Forms 6252, principal and interest collected during the year, SSN and address for payer
  • Income from miscellaneous sources: jury duty, gambling winnings, Medical Savings Account, scholarships, etc.

Next, you’ll want to sort through receipts for tax deductible expenses.

  • Student loan interest paid (or loan statements for student loans), 1098-E form
  • Tuition paid (or receipts/canceled checks for tuition paid for post-high school), Form 1098-T
  • Are you an educator in grades K-12? If so, gather canceled checks or receipts for expenses paid for classroom supplies, etc.
  • IRA yearly contributions
  • Medical Savings Account (MSA) contributions
  • Receipts for any qualifying energy-efficient home improvements (i.e. solar, windows, etc.)
  • Records of Medical Savings Account (MSA) contributions
  • Records of moving expenses
  • Alimony paid
  • Self-employed health insurance payment records
  • Keogh, SEP, SIMPLE, and other self-employed pension plans

If you itemize your taxes, you’ll need documentation for the following information:

  • Childcare expenses: For fees paid to licensed day care center or family day care, include provider’s name, address, tax identification number, and amount paid. If you utilized a babysitter, include proof of wages paid.
  • Education costs: Form 1098-T, education expenses
  • Adoption costs: Social security number of children; records of legal, medical, and transportation costs
  • Mortgage interest, private mortgage insurance (PMI), and points you paid, form 1098
  • Investment interest expenses
  • Charitable donations: cash amounts, official charity receipts, canceled checks; value of donated property; miles driven, and out-of-pocket expenses
  • Medical and dental expense records: total amounts paid for healthcare insurance and expenses. It’s best to include itemized receipts. If you’re enrolled in a healthcare insurance plan through the Healthcare Marketplace, include form 1095-A; B and/or 1095-C for insurance coverage from other sources.
  • Casualty and theft losses: amount of damage, insurance reimbursements
  • Other miscellaneous tax deductions: union dues, un-reimbursed employee expenses (i.e. uniform, supplies, seminars, continuing education, publications, travel, etc.)
  • Records of home business expenses, home size/office size, home expenses
  • Rental property income/expenses: profit/loss statement, rental property suspended loss information

Other documents or information to gather before you file your taxes includes:

  • Personal information like social security numbers and dates of birth for yourself, spouse, and dependents.
  • Copies of tax returns from the previous year to use as a reference.
  • A blank check, or your bank account and routing numbers on hand if you opt to have a refund direct deposited into your account.
  • Records of tax payments for state and local income taxes, real estate taxes, personal property taxes, or vehicle license fees based on value of vehicle.
  • Estimated tax payments made during the year if you are self-employed.
  • Prior-year refund applied to current year and/or any amount with an extension to file.
  • Foreign bank account information: location, name of bank, account number, peak value of bank account during the year

Make a Tax Appointment

There are numerous ways to complete the filing of your personal taxes. You can hire a tax preparation company, an Accountant, or you can opt to complete taxes yourself. Self-filing your taxes may not be feasible for everyone but can be a great option for simple returns.

Whatever route you choose, getting organized helps eliminate the headache of filing your personal taxes.

This article is not to be taken as tax advice. Tax rules change and vary by location and industry, consult a Certified Public Accountant (CPA) or tax adviser for specific guidance.