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Your Tax Season Checklist

Feb 04, 2021 4 min read Eric Rosenberg

Key takeaways

  • A checklist can help you save time when preparing your taxes.
  • Keeping tax documents organized in one place is a good idea year-round.
  • Talk to a tax professional if you have tax questions.

 

If you've ever painted a room, you know that the real work is in the prep—covering the floor and furniture, laying out tools and supplies, taping edges and corners. The same goes for your annual tax return. Whether you file with a pro or on your own, getting everything in order by Tax Day (usually April 15 but recently extended to May 17 for 2020 federal taxes) can be a chore.

One solution: a tax season checklist. No matter how complicated your taxes may seem, this tool can help you gather and organize the documents you need before you put pen to paper (or fingers to keyboard).

As you prepare your taxes this year, keep this list close by to stay organized and avoid getting overwhelmed.

 

 

Personal information

To start, gather your household's personal information, which you may have handy from last year's return.

  • Legal names and birthdates

    —for yourself, your spouse and any dependents.
  • Social Security numbers

    —for every filer and dependent.
  • Prior-year tax returns

    —These can have key information and highlight important changes from one year to the next.

 

Income from work

Depending on how you work, you may have one or more tax forms showing your income. (Even if you don't get a form from the person or organization that paid you, you must report all income to the IRS.)

  • W-2

    —If you had a part- or full-time job, your employer must send you a W-2 form by January 31.
  • 1099-MISC

    —This for is common for freelancers, contractors and self-employed people who do work for other companies. You should receive one for any contract work that earned you more than $600 in 2020.

 

Income from other sources

Income from outside work may be taxable. Common sources:

  • Bank and investment income

    —If you earned bank interest, you may get a 1099-INT form. If you had dividend income, expect your investment firm to send you a 1099-DIV. (Forms 1099-OID and K-1 are for less common investments.)
  • Retirement income

    —Retirement-plan distributions will yield a Form 1099-R. Social Security benefits are reported on the SSA-1099.
  • Government income

    —Government benefits and other payments may require a 1099-G form.
  • Online sales

    —If you earned a large portion of your income through third-party payment platforms, you may get a 1099-K form.

You may also have lottery or gambling winnings, gifts or other miscellaneous income to account for. If you're unsure, tax software or a tax professional can help ensure that you pay or receive the proper amounts.

 

Common deductions and credits

Tax deductions lower your taxable income, while tax credits cut your tax bill dollar for dollar. Common credits include the Child and Dependent Care credit Opens in new window, Earned Income Tax Credit (EITC) Opens in new window and lifetime learning credits Opens in new window.

Many taxpayers take the standard deduction Opens in new window ($24,800 for married couples filing jointly, $12,400 for individuals and $18,650 for heads of household for 2020). But if your individual deductions add up to more than the standard, itemizing could be a better deal. Common expenses that may be deductible:

  • Individual Retirement Account contributions
  • Child care costs
  • Education costs (detailed on form 1098-T)
  • Mortgage interest paid (detailed on form 1098)
  • Investment expenses
  • Charitable donations
  • Medical and dental expenses that top 7.5% of your adjusted gross income (AGI); your state might have a different threshold
  • Unreimbursed work expenses (less common under the 2017 tax law)
  • State, local and property taxes (up to $10,000)

You may need to show proof of expenses you deduct. So, if you think you might itemize, make sure to keep receipts and records of your expenses throughout the year.

 

Get ready for a smooth tax filing experience

Tax preparation doesn't have to be overwhelming or confusing. When you stay organized all year, have your paperwork and information in order, and use a checklist like this to help make sure, doing your own taxes—or even calling in a pro—can be a breeze.

Of course, if you have questions, consider consulting a tax advisor. (Prudential doesn't offer tax advice.)

 

What you can do next

Create paper and digital folders for both this and next year's taxes, and save all relevant materials, forms and documents as they arrive. Research the best tax software for your needs this year, or choose an accountant or tax-preparation service to handle your taxes for you.

Footnotes

Eric Rosenberg writes about personal and business finance and has contributed to publications including Business Insider, The Balance, Investopedia and the Huffington Post.

 

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