Tax day is right around the corner. Here are some of the important tax documents to start compiling.
February is a good month to start compiling financial information. As tax season quickly approaches, taking inventory of accounts and listing important documents can help prevent headaches come April 15th.
Organizing and collecting all information and documentation beforehand can make the task of actually filing taxes much easier. Most material will generally come from two sources.
The first source of financial information to begin collecting for taxes is simply personal information and Social Security numbers (SSNs). Although many people already know their SSN, keep in mind that when filing taxes you will not only need to identify yourself, but also anyone else who belongs on your return. Collect information such as birthdates and SSNs from any children or other dependants. Information on personal assets and liabilities will also need to be reported. Assets can include automobiles, real estate, bank accounts, retirement funds, and life insurance. Liabilities can include outstanding mortgages, loans, or bills.
The second source of important information will come from tax documents such as W-2, 1099, and other forms from financial institutions. Collect any information or tax documents that complete the snapshot of your current financial situation. Income tax documents will come from different sources depending on how an individual is employed. Employment by a company calls for the W-2 form. Self-employment requires the 1099 form, along with all records of business expenses and assets. Tax documents may also come from business receipts or donation receipts. If applicable, compile educational institution documents as well. Record tuition payments, interest paid on student loans, or scholarship reimbursements.
The sheer amount of information to comb through can be overwhelming. However, gathering all your information in one place can help make tax season less stressful. Although the exact documents necessary depend on every personal situation, we have compiled a list of items you’ll need prepare your taxes in our Tax Filing Checklist.