The beginning of a new year often signals the time to gather your tax documents for the previous year, especially with the deadline to file taxes looming. If you're wondering how to efficiently compile your 2018 tax documents, here are five crucial steps that will streamline this process, ensure you capture all necessary deductions, and keep you organized.
Step 1: Locate Your Income Documents
Start your tax gathering journey with documents that showcase your income:
- W-2 Form: Your employer provides this detailing your wage income and taxes withheld.
- 1099 Forms: If you’ve freelanced or earned income outside standard employment, look out for 1099-MISC, 1099-NEC, or other forms like 1099-INT, 1099-DIV for interest or dividends.
- 1099-R: For pension or retirement plan distributions.
These documents are usually mailed to you by January 31st or available online from your financial institutions.
Step 2: Document Your Deductions and Credits
Keeping track of your deductions and credits can significantly reduce your taxable income. Collect:
- Mortgage Interest Statement (Form 1098): This form is sent if you paid mortgage interest during the year.
- Charitable Contributions: Gather receipts or acknowledgment letters for any donations.
- Student Loan Interest: Look for the Form 1098-E, but be aware that loan servicers might not send this if interest paid is under $600.
- Medical Expenses: Keep a log of payments for medical care, insurance, or treatments.
- Child and Dependent Care Expenses: If you’ve paid for childcare, gather these receipts.
💡 Note: Remember, for any deduction or credit, you’ll need receipts or official documentation to back up your claims.
Step 3: Gather Investment and Retirement Records
Investments play a significant role in your tax liability or refunds. You’ll need:
- 1099-B: For proceeds from broker transactions.
- 1099-DIV: For dividend income.
- 1099-INT: For interest income.
- 1099-R: For retirement or pension distributions.
- K-1 Forms: If you’re involved in partnerships, S corporations, or other pass-through entities.
| Form | Details |
|---|---|
| 1099-B | Sales of stocks, bonds, or mutual funds |
| 1099-DIV | Dividends from investments |
| 1099-INT | Interest income from bank accounts or bonds |
| 1099-R | Retirement plan distributions or annuities |
Step 4: Address Miscellaneous Items
There are a few miscellaneous documents you might need to include:
- Health Insurance Marketplace Statement (Form 1095-A): If you received a premium tax credit, you’ll need this to reconcile your subsidy.
- Home Sale Documentation: If you sold a property, gather documents like the closing statement and property tax records.
- Business Expenses: Self-employed individuals must document all related expenses.
🔍 Note: Ensure all documents are detailed and up-to-date. It helps in case of an audit or any questions from the IRS.
Step 5: Organize and Review
Organize your gathered documents systematically to ensure a smooth tax preparation process:
- Sort documents by category: income, deductions, investments, etc.
- Review each document for correctness and completeness.
- Keep digital copies or scans as backups.
- Compile a checklist of what you’ve gathered to avoid missing anything.
With the steps above, you've now walked through the comprehensive process of gathering your 2018 tax papers. Organizing your financial documents early can reduce stress, save time, and potentially lower your tax bill or maximize your refund. Understanding each type of tax form, knowing what deductions and credits you're eligible for, and keeping meticulous records will not only make this tax season easier but also benefit you in future filings.
The journey of tax preparation is not just about compliance but also an opportunity to review your financial health. Keep your documents well-organized for future reference, and remember that being proactive with your tax strategy can yield substantial benefits. Whether you're aiming to minimize your liability or maximize your return, your preparation today sets the stage for a financially sound tomorrow.
Can I file my taxes without receiving all my tax forms?
+
While it’s possible to file taxes without all your forms, it’s recommended to wait until you have all your documentation to avoid errors or missing deductions. Filing electronically with a tax service can sometimes auto-fill some information, but for accuracy and completeness, wait for all documents.
What should I do if I lose a tax document?
+
Contact the issuer (employer, bank, etc.) for a reissued form, check if you have electronic records, or look for a paper copy. If unavailable, consider requesting a corrected wage and tax statement from the IRS or recreate income statements if possible.
How long should I keep my tax documents?
+
The IRS recommends keeping tax records for at least three years from the filing date or two years from the date the tax was paid, whichever is later. Keep documents related to property or investments for longer due to potential depreciation or disposition issues.
What are common overlooked tax documents?
+
Common overlooked documents include 1099 forms for interest or dividends, records of gambling or lottery winnings, any income from foreign sources, or self-employment income if not issued a 1099-NEC or MISC.
