The new year has begun, it is time to start gathering documents and information for your tax advisor. This can be an overwhelming and time-consuming task. One choice is that we can send you an organizer that will summarize data you have sent in the past.

To help manage the process, here are the items needed to prepare a personal tax return.

Income

  • W-2 – Wage & Income Statement
  • 1099-NEC – Non-Employee Compensation
  • 1099-Miscellaneous – Usually Rental Income
  • 1099-R – Retirement Statement
  • SSA-1099 – Social Security & Medicare Statement
  • K-1 for Partnerships, S-Corporations, or Trusts
  • 1099-INT – Interest Income
  • 1099-DIV (Dividend Income) and 1099-B (Capital Gains Income) which may come as a combined package from your brokerage
  • Any other income earned from a business, rental, royalties, or farm/ranch
  • Less common items
    • 1099-G for unemployment or state tax refunds
    • W-2G for gambling winnings
    • Amount of alimony received

Most income is considered taxable. It is better to send the information to your tax advisor so they can figure out taxability.

Expenses

  • Business expenses incurred that are ordinary and necessary
  • Large business purchases that may need to be depreciated
  • A W-3 showing wages paid to employees (unless we prepare this for you)

This will primarily relate to taxpayers with businesses, rentals, farms and ranches, as most other income sources will not have any tax-deductible expenses to offset the income.

A common question is whether you need to provide receipts to us. For day-to-day expenses, no receipts are needed for tax preparation. However, we highly recommend you keep records of those expenses. For large purchases that are out of the ordinary, please provide a receipt or invoice to your tax advisor.

If you are using software such as QuickBooks Desktop or QuickBooks online, remember to send us a copy of the file, software version and login information.

Tax Deductions

If you have more itemized deductions than the standard deduction – $25,900 married filing jointly for 2022, please provide the following:

  • Medical and dental expenses paid out of pocket, if it looks like they will be higher than 7.5% of your income
  • Real estate taxes
  • Sales tax on major purchases such as vehicles, boats, or home remodels
  • 1098 showing mortgage interest paid and mortgage insurance premiums, if any
  • Cash donations to qualified 501(c)(3) organizations – if a single donation is over $250, provide a receipt from the organization
  • Non-cash donations – if all donations total over $500, provide a receipt from the organization of the items donated and the fair-market-value of the items
  • Gambling losses (only if you have gambling income)

Other tax deductions are available without itemizing:

  • 1098-E for student loan interest paid
  • Eligible educators can deduct up to $300 worth of qualified expenses paid out of pocket
  • Alimony paid is still tax deductible in certain circumstances

Tax Credits

There are tax credits available that will dollar-for-dollar reduce your tax bill. It is imperative you provide information to determine if you qualify for these credits.

  • Childcare expenses –provider’s name, EIN or SSN, address, and total amount paid
  • 1098-T for tuition paid to higher education institutions for you or a dependent
  • Residential energy credits
  • Adoption credit

Miscellaneous Forms

  • 1095-A for marketplace insurance and premium tax credit
  • 5498-SA for health savings account (HSA) contributions
  • 1099-SA for distributions from HSA accounts

Other Important Information

  • Personal and dependent information including social security numbers, dates of birth, and current address
  • Contact information such as phone numbers and emails
  • Bank routing and account information for refund deposits and direct withdrawal of estimated payments and balance due
  • Details about any foreign bank accounts or assets, if any
  • Federal and state estimated tax payments made

The most efficient and secure way to send this information to us is electronically via our Client Portal found at www.ktllp.cpa. Simply click “Client Portal” on the home page then “Login to Client Portal.” On the next page, choose the recipient (your tax advisor) from a drop-down menu, drag the files onto the screen, and choose “Upload”. The recipient will receive a notification of the available documents.

Other ways to send us your information include emailing documents (keep in mind this is less secure), mailing them to our office, or dropping them off at our front desk or the drop box outside our building.

A question we often hear is, “When do you need my information?” The answer is there are multiple factors to consider. We understand that certain tax documents are simply available later in the year. However, the sooner you supply what information you do have, the more time your tax advisor will have to analyze it and determine the outcome of your return.

This is not meant to be a comprehensive list. Be certain to have a conversation with your tax advisor at Ketel Thorstenson to find out if there are more details that need to be included on your tax return.