Tag: taxes

Documents to Bring to Your Tax Preparer

April 4, 2024MBEhleAdvice, Finance

In many parts of the country, April marks a return to warm temperatures, landscapes marked by blooming foliage and perhaps even a colorful flower or two. April also signals tax season, a notion that may elicit different reactions than warmer weather and budding plants, particularly among those who do not anticipate receiving a tax refund.

According to the Internal Revenue Service, the deadline to file a 2023 tax return is Monday, April 15, 2024. Individuals who file more complicated returns or those who simply don’t have the time to file on their own typically look to tax preparation professionals to ensure their returns are filed correctly and on time. As the tax deadline draws closer, taxpayers who work with tax preparation professionals can make that partnership go more smoothly by ensuring they bring along these necessary documents and details to their appointments.

Social Security Numbers

Individuals who are filing as single or jointly with a spouse will need to list the Social Security numbers of each person on the return. Taxpayers with dependents will need to provide the full names and Social Security numbers of each dependent as well as their own Social Security numbers.

Identification

A copy of a form of identification, such as a driver’s license or passport, also must be included in a tax return. The identification confirms a person’s identity and the name on the ID provided must match the name associated with the Social Security number provided.

Income statements

Tax preparers need a copy of each taxpayer’s W-2 form, which employers must provide by the end of January. Taxpayers with more than one job must provide a W-2 from each employer. Additional income statements, such as forms indicating gambling winnings or retirement account distributions, also must be provided to the tax prep pro. Taxpayers who have such income should contact their tax preparation pro prior to their appointment to determine which additional income form they need to file.

Tax Deduction Documents

Tax deductions save taxpayers money, and taxpayers may be eligible for a range of deductions. For example, homeowners who finance their home purchases with mortgages will receive a 1098 form from their mortgage provider each January. That form is a mortgage interest statement that can help homeowners reduce their tax obligations. Donations, student loan interest payments and college tuition costs are some additional potential deductions. Charities, student loan servicing firms and colleges or universities should provide tax deduction documents by the end of January, and taxpayers can turn these forms over to their tax preparation professional so they earn all eligible deductions.

Receipts

Some expenses are eligible for tax deductions. Taxpayers can contact their tax preparation professional to determine if any medical bills, business expenses, charitable contributions, or additional expenses are deductible. Receipts may be required, and individuals are urged to hold on to any receipts they might be able to use to earn a tax deduction.

Tax season has arrived, and taxpayers are urged to provide all relevant documents to their tax preparers to ensure their returns are filed correctly and on time.

3 Steps To Simplify Tax Prep So You Can File On Time

March 30, 2023MBEhleAdvice, Finance

Spring is noted for the sense of rejuvenation it inspires when temperatures warm up and flowers begin to bloom. But in the United States, the onset of spring is followed shortly thereafter by tax season, which typically generates entirely different feelings than the first sight of spring blooms.

The deadline to file tax returns in the U.S. in 2023 is Tuesday, April 18. With that deadline looming, now is a good time to consider these three basic tax preparation tips, courtesy of the Internal Revenue Service.

1. Access your IRS account. Individuals can access or create their IRS account at irs.gov/account. That ensures taxpayers have the latest information about their federal tax account and enables them to see information about their most recently filed return. A visit to irs.gov/account also allows individuals to make payments and apply for payment plans, among other options.

2. Organize your tax records. The IRS urges taxpayers to wait to file their returns until they have all of their records, including:

– Forms W-2 from employer(s)

– Forms 1099 from banks, issuing agencies and others payers, including unemployment compensation, dividends, pension, annuity or retirement plan distributions

– Form 1099-K, 1099-MISC, W-2, or other income statement if you worked in the gig economy

– For 1099-INT if you were paid interest

– Other income documents and records of digital asset transactions, including convertible virtual currency and cryptocurrency, stablecoins and non-fungible tokens (NFTs)

– Form 1095-A, Health Insurance Marketplace Statement, to reconcile advance payments or claim Premium Tax Credits for 2022 Marketplace coverage

– IRS or other agency letters

– CP01A Notice with your new Identity Protection PIN

3. Check your Individual Tax Identification Number. The IRS notes that an ITIN only requires renewal if it has expired and is needed on a federal tax return. An expired ITIN can delay the processing of a return, which in turn can delay tax credits and refunds.

Taxpayers filing with the help of a licensed tax professional are urged to contact that individual to inquire about any additional information they may need to file a return on time. Make such an inquiry well in advance of the deadline to file so you have sufficient time to gather all of the necessary documentation.

More information about filing taxes is available at irs.gov.

Understanding Health Savings Accounts

January 25, 2017MBEhleAdvice, Healthy

Navigating health insurance plans can be confusing. One health insurance product that’s relatively easy to understand is a health savings account, or HSA. This type of account can help account holders save money on the costs associated with their healthcare.

What is an HSA?

HSAs are like any other savings account, except they can be used for medical, vision and dental expenses. HSAs are tax-advantaged, meaning that income can be deposited into an HSA before it is taxed. HSAs can only be opened and used in conjunction with a high-deductible health insurance plan, or those with a deductible of at least $1,300 for an individual or $2,600 for a family.

HSA details and eligibility requirements

Although HSAs have contribution limits, they’re advantageous in that the savings accumulated can be used to pay for noncovered, qualified medical expenses, such as copays, vision and dental care and even deductibles.

HSAs may be established through an employer-sponsored insurance plan or through a bank or other financial institution. To qualify, a person must be under the age of 65 and have a high-deducible health insurance plan.

What are the advantages and disadvantages of HSAs?

There are advantages and disadvantages to HSAs. HSA account holders can control how their saved money is spent, and there’s no risk of losing the money at the end of the year because it rolls over. Taxes are not paid on money going into the HSA. In addition, employers can contribute to HSAs, and account holders do not lose their balances when they change jobs.

Disadvantages include the challenge of setting aside money to put into the HSA, especially if finances are tight. One who has certain medical situations that are urgent may find that budgeting for an HSA is impractical.

A retirement saving vehicle

In addition to the other benefits mentioned, HSAs can be used as a way to invest in retirement. The resource NerdWallet, which offers financial tools and objective advice to help people understand their options and make the best possible decisions, says an HSA is a good retirement savings option, especially for high-income earners who can’t make deductible contributions to a traditional IRA or any contributions to a Roth IRA. HSAs can help offset healthcare costs and even help with long-term financial planning.

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Get a Head-Start on Tax Season

January 19, 2017MBEhleAdvice, Organize, Saving

While the deadline to file returns may be several months away, getting a head-start allows men and women the chance to organize their tax documents so they aren’t racing against a deadline come April. The following are a handful of ways to start preparing for your returns now.

The dawn of a new calendar year often marks the end of the sometimes hectic holiday season. This time of year marks a return to normalcy for many families, as the kids go back to school and parents return to work.

The beginning of January also serves as a great time to start preparing for tax season. While the deadline to file returns may be several months away, getting a head-start allows men and women the chance to organize their tax documents so they aren’t racing against a deadline come April.

Ways to Start Preparing for your Returns Now

Find last year’s return. You will need information from last year’s return in order to file this year, so find last year’s return and print it out if you plan to hire a professional to work on your return.

Gather dependents’ information. While you might know your own Social Security number by heart, if you have dependents, you’re going to need their information as well. New parents or adults who started serving as their elderly parents’ primary caretakers over the last year will need their kids’ and their folks’ social security numbers. If you do not have these numbers upon filing, your return will likely be delayed and you might even be denied potentially substantial tax credits.

Gather your year-end financial statements. If you spent the last year investing, then you will have to pay taxes on any interest earned. Interest earned on the majority of savings accounts is also taxable, so gather all of your year-end financial statements from your assorted accounts in one place. Doing so will make filing your return, whether you do it yourself or work with a professional, go more quickly.

Speak with your mortgage lender. Homeowners should receive forms documenting their mortgage interest payments for the last year, as the money paid in interest on your home or homes is tax deductible. If these forms are not received in a timely manner, speak with your lender. You might even be able to download them from your lender’s secure website.

Make a list of your charitable contributions. Charitable contributions, no matter how small, are tax deductible. While it’s easiest to maintain a list of all charitable donations you make as the year goes on, if you have not done that, then you can make one now. Look for receipts of all contributions, contacting any charities you donated to if you misplaced any receipts.

Book an appointment with your tax preparation specialist now. As April 15 draws closer, tax preparers’ schedules get busier and busier. The earlier you book your appointment, the more likely you are to get a favorable time for that meeting. In addition, if you have gathered all of the information you need by early February, then booking your appointment early means you can file earlier and receive any return you might be eligible for that much quicker.