While the deadline for filing your 2024 tax return is a couple of months away, getting your tax records organized now can help you avoid errors that could slow your refund or overlook possible deductions or credits.
Your tax return from the previous year is a great starting point. By looking at your previous return, you can quickly see what tax information you probably need now.
Documents Needed
Tax records that taxpayers often need to file their tax returns include:
• Forms W-2 from your employer(s)
• Forms 1099 from banks, issuing agencies and other payers including unemployment compensation, dividends, pension, annuity or retirement plan distributions
• Form 1099-MISC or other income statement if you worked as an independent contractor
• Form 1099-K for taxpayers who received more than $5,000 in payments for goods and services through an online marketplace or payment app
• Form 1099-INT if you were paid interest
• Records of digital asset transactions
• If you receive health insurance from the Health Insurance Marketplace, you will need to submit Form 1095-A to reconcile advance payments or Premium Tax Credits
• IRS or other agency letters
• An Identity Protection PIN, if the IRS has provided you with one.
Most income is taxable, so you will want to gather records from these other income sources below as well:
• Unemployment income
• Alimony
• Investment income
• Rental property income and expenses.
• Social Security benefits
• Individual Retirement Account distribution
• Miscellaneous income (jury duty, scholarships, gambling winnings)
Address/Name Change
If your address has changed, you should notify the IRS as soon as possible. Similarly, notify the Social Security Administration of a legal name change.
Adjustments and Expenses
You should also gather documents regarding any income adjustments that may reduce your taxable income and thus your tax payment:
• Student loan interest
• Moving expenses in certain circumstance
• Child and Dependent Care Tax Credit
• Mortgage points
Most taxpayers benefit more from taking the Standard Deduction than by itemizing expenses on Schedule A. For tax year 2024, the Standard Deduction is $14,600 for single filers and $29,200 for married taxpayers filing jointly.
You should review your records if you have substantial expenses on any of the following if you wish to consider itemizing:
• Mortgage interest paid
• State and local taxes paid
• Charitable donations
• Medical expenses paid for healthcare, insurance, and to doctors, dentists, and hospitals
• Amounts of miles driven for charitable or medical purposes
Life Changes
If you had significant changes in your life in 2024 such as marriage, divorce, starting your own business, purchasing or selling a home or becoming a parent, your taxes may be more complicated. A certified public accountant (CPA) or other tax professional will be essential in preparing and file your tax return. Again, that process should start sooner rather than later.
Direct Deposit of Tax Refund
The fastest way for you to get your tax refund is by choosing direct deposit. Be sure your tax return indicates this option and includes your bank routing and account number.
Required Minimum Distribution
If you have a 401(k) or IRA and turned 73 in 2024, you may need to make withdrawals and pay income tax on them. The amount of your required minimum distribution (RMD) is based on your age and the year-end values of your retirement accounts, and must be taken by April 1, 2025.
Tax Scams
As tax season is underway, taxpayers may be subject to scams via phone calls, emails and texts from entities claiming to be the IRS. Typically, the IRS will mail you a notice before using any other method of communication to notify you concerning issues with your tax return. The IRS does not reach out via social media or text messaging.
The IRS will send you a notice if you have a balance due, if changes were made to your tax return, or if the agency needs additional information. It’s important to respond quickly to the IRS especially if it found an error on your return or claims you owe back taxes. Your certified public accountant or other tax professional can respond to the IRS on your behalf.
If you have questions about this featured topic or other accounting and tax related topics, please do not hesitate to contact us at 727-327-1999 OR [email protected].
ANY TAX ADVICE IN THIS COMMUNICATION IS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, BY A CLIENT OR ANY OTHER PERSON OR ENTITY FOR THE PURPOSE OF (i) AVOIDING PENALTIES THAT MAY BE IMPOSED ON ANY TAXPAYER
