Getting Ready For Tax Season
Peter VanderWoude, MS, CPA, CGMA
January 1, 2018
Now that Congress has rewrittten the tax code for 2018, tax attorneys and CPAs will study the tax bill for changes that are not well known. Congress will likely make some modifications throughout 2018 to the tax code to fix issues that come up. Of more importance to us right now is to get ready for the upcoming tax filing season with the following reminders.
If you are a business owner or own rental property, don’t forget the 1099 reporting requirement. If you paid a contractor $600 or more during 2017 that 1099-MISC needs to be sent to the IRS by January 31. Other 1099’s get sent to the IRS by February 28.
Pretty soon you will get your W-2s, 1098 (mortgage interest), 1099’s and other tax reporting statements. Place them all in a folder as they arrive in your mailbox. As you wait to receive all your expected tax reporting documents, gather your real estate tax bills, charitable donation receipts and medical/dental expenses if they exceed 10% (7.5% if you are age 65 or older) of your adjusted gross income--otherwise do not waste your time, and your business records and rental property records.
Usually your tax preparer can tell if you are missing tax documents, but if you took an early distribution from an IRA or 401(k) type account, they won’t know because it is a one time thing. You will avoid headaches later if you keep track of these distributions and alert your tax professional. Many times these retirement account distributions are missed or some people mistakenly think that because taxes were withheld they don’t have to report these transactions.
If you are going to have a new tax firm prepare your taxes, make sure to bring at least last year’s tax return with you. Most tax firms prefer having copies of the last three years tax returns. Since we have a major change to our tax code for 2018, you should consider asking your tax professional to guide you with an estimate of your tax picture for the new year.
Once you gathered all your tax documents, either scan them and send via a secure document exchange to your tax firm or get the hard copies to them. If you are going to make retirement or HSA contributions, make them prior to April 15 for the 2017 tax year and let your tax preparer know the amount.
Staying organized with your tax documents does not have to be difficult. As long as it is all in the folder you hand to your tax preparer, your tax return can be effectively prepared. If your tax professional can guide you on how tax reform will affect you for 2018, that will either put a smile on your face or remove some of the uncertainty of the changes coming for 2018.
Stay warm and Happy New Year!