Which Documents You Need to Get Your Taxes Done
Most tax accountants get really busy between February and April, because everyone is filing their taxes. With deadlines looming, it’s a good idea to get organized now. Before your accountant can get to work, they need all relevant documentation. It may seem annoying to gather all that paperwork, but it’s necessary. In some cases, the more paperwork you find, the larger your deductions, so it’s in your best interest to get busy. Here is a list of documents businesses and individuals need for tax time.
The first step in filing your tax return is to determine your earnings. For that, you’ll need to gather your gross receipts, returns, and allowances, and any other income that’s not related to the sale of goods or services. Your accountant doesn’t need every single transaction. Instead, you will have to provide a total for your sales.
The next step is determining your inventory. Depending on how you’re accounting for inventory, such as LIFO or FIFO, you’ll need the beginning inventory balance at the beginning of the year, the ending balance, and sales and returns. It’s important to perform periodic inventory counts to detect spoilage, loss, or theft before the year is over, too.
Your biggest category will be business-related expenses. Here we’ll list a few expenses that are common, but this is by no means an exclusive list:
- vehicle expenses
- commissions and fees
- employee wages and benefits
- continuing education
- interest on business debt
- professional fees, including legal and accounting expenses
- meals (only partly deductible)
- office expenes
- taxes (not income taxes)
It’s a good idea to have your accountant take a look at your expense categories. There may be other expenses you can deduct that are related to your business. And that’s why you hire an expert to do the taxes for you: to find every possible deduction.
Whether you’re running a business or not, you must file an individual income tax return as well. Only people who earned less than the standard deduction are exempt from filing a return. In most cases, it’s not even in their best interest to skip filing the tax return, because they may get a refund.
To file a tax return, you’ll need a W2 from each employer you had in 2017. If you have worked as an independent contractor, you’ll also receive a form 1099. Finally, you may receive interest income from your bank or dividend income from your stock holdings. You should also report any other income that you have received to your accountant to determine whether you need to declare this on your tax return, such as child support, alimony, partnership income, financial gifts, or tips.
To file a return, your accountant will require your Social Security number, or SSN. If you have a spouse or dependents, you also need their respective SSNs. While you don’t have to add your dependents to your tax return, they can save you money. Currently, you receive a personal exemption for every person in your household. And if your dependents are children under the age of 17, you may qualify for the child tax credit or additional child tax credit. Finally, you can sometimes deduct dependent care expenses, such as daycare costs.
Now it’s time to have some fun. You’ll want to collect as many deductions as you possibly can to reduce the amount of taxes you owe. Here are some examples of deductions and credits you may qualify for:
- mortgage interest deduction
- student loan interest deduction
- tuition expenses
- moving expenses
- energy credits
- self employment taxes
It’s important to collect every statement you receive in the mail. If you’re getting them in electronic form, you can print them out and put them with your collection. This may seem annoying, but each of these pieces of paper could save you a lot of money here real soon. Last but not least, you want to bring last year’s tax return with you if you’re a new client.
What Not to Do
It’s important to be as organized as possible. If you ask your accountant to sort through your receipts and tally them up for you, you’re going to pay a lot of money for something you can do yourself (or hire a bookkeeper to do). If you have any questions about the documents to bring along with you, you can give us a call before your appointment.
Camputaro and Associates
Certified Public Accounting Firm
136 N. Orchard Street, Suite 8
Ormond Beach, FL 32174