Want to Prepare for Tax Time? 3 Items to Gather Throughout the Year
Posted on: 10 May 2019
For most individuals and business owners, filing your taxes is not a pleasant task. Unfortunately, it is an important task that must be completed in a timely and effective manner. Thankfully, you can avoid mistakes and reduce your risk of an audit by preparing all through the year. This guide will help you gather and organize a few imperative documents you will need before filing your taxes.
Income Statements
You may be filing your taxes once a year, but you will be receiving income all through the year. Therefore, you should make sure to collect all of your income statements you receive throughout the year to make the process of filing taxes a bit easier.
Most people receive a W-2 with their total income/taxes paid/etc. listed, but pay stubs can be a great option to have if you feel there is a discrepancy in how much you made/paid during the year. Gather all of your pay stubs together and compare them to the W-2 before filing your taxes.
Money received through gambling, contests, inheritances, or investments, is also deemed income, so you should gather any statements showing this income, as well.
Small business owners and contractors must also collect income statements throughout the year. If you have any 1099 forms, make sure you have these on hand before you start filing taxes.
Medical Receipts
You can deduct medical expenses on your taxes, but you must have records/receipts showing that you had these expenses.
Throughout the year, collect receipts and documents showing proof of expenses for basic medical care, prescriptions, medical equipment, procedures/surgeries, eyeglasses, orthodontics, and dental treatments. In addition, you can deduct mileage to and from different appointments for medical purposes, so having mileage records and gas receipts is also helpful.
In some instances, your health insurance premiums may also be deducted on your taxes. There are stipulations, so it is important to consult your tax preparation professional to determine if your specific premiums are tax deductible.
Business Expenses
Any purchases made during the year for your business are business expenses, which are tax deductible. Again, you must have proof of these expenses to include them as deductions.
Receipts for vehicle maintenance and gas for a vehicle that is used for your business should be gathered throughout the year. You should also log mileage driven for your business.
Office supplies, equipment, electronics, telephones and computers, office furniture, and even utilities for an office space can be deducted. If you purchased meals or gifts for customers/clients or have traveled for your business, these can also be deductions, but having receipts as proof is key.
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