Tax Prep For Upcoming 2020 Season
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Top 3 Tax Prep Tasks You Should do at the End of the Calendar Year.
1. Documents Gathering
The following documents will be very important for the complete and proper filing of your taxes. Whether it's individual-single return, joint-separate, head-of-household, self-employed individuals including Uber and Lyft drivers, Newspaper and Food Delivery, Contractor, Artist, Barber, Laborer and more.
· Proof of identification (photo ID)
· Social Security cards for you, your spouse and dependents
· An Individual Taxpayer Identification Number (ITIN) assignment letter may be substituted for you, your spouse and your dependents if you do not have a Social Security number
· Proof of foreign status, if applying for an ITIN
· Birth dates for you, your spouse and dependents on the tax return
· Wage and earning statements (Form W-2, W-2G, 1099-R,1099-Misc) from all employers
· Interest and dividend statements from banks (Forms 1099)
· Health Insurance Exemption Certificate, if received
· A copy of last year’s federal and state returns, if available
· Proof of bank account routing and account numbers for direct deposit such as a blank check
· To file taxes electronically on a married-filing-joint tax return, both spouses must be present to sign the required forms
· Total paid for daycare provider and the daycare provider's tax identifying number such as their Social Security number or business Employer Identification Number
· Forms 1095-A, B and C, Health Coverage Statements
· Copies of income transcripts from IRS and state, if applicable
2. Tax Professional Debriefing
Filing your taxes can be uncomfortable at time and finding the right tax professional to bridge over the sense of not completely exploiting a certain level of comfort in order to openly declare your source of income, maximize your deductions, optimize your refund, and strengthening your defensive shield, that is your next step.
While it is fine to DIY on your taxes but when you are busy making money, you might want to have someone whose profession is to correctly file your taxes and many others. Your connection with your tax professional has to be one of the strongest financial liaisons you should have for as long as you will care for about your money.
The process of debriefing can be as awkward as answering the questions of a detective agent if you are not in harmonious terms with your tax professional. On the other hand, if you and your tax professional are in great working terms, you will feel so much freer to detail your taxes openly with confidence that everything will be done right professionally.
Not disclosing your extra income to your tax professional is very disturbingly bad practice, and the price to pay can be heavy and can hit you at the wrong time of the year. That time is none other than the unexpected part it.
3. Deduction Checklist Completed by Year End
And as far as deductions, you must turn up each rock and every mattress that you can to find your receipts for the following deductible items.
Examples of Medical and Dental Payments You Can Deduct
Insurance premiums for medical and dental care, including premiums for qualified long-term care insurance contracts Prescription medicines or insulin.
· Acupuncturists, chiropractors, dentists, eye doctors, medical doctors, occupational therapists, osteopathic doctors, physical therapists, podiatrists, psychiatrists, psychoanalysts (medical care only), and psychologists. • Medical examinations, X-ray and laboratory services, insulin treatment, and whirlpool baths your doctor ordered.
· Diagnostic tests, such as a full-body scan, pregnancy test, or blood sugar test kit.
· Nursing help (including your share of the employment taxes paid). If you paid someone to do both nursing and housework, you can deduct only the cost of the nursing help.
· Hospital care (including meals and lodging), clinic costs, and lab fees.
· Qualified long-term care services
· The supplemental part of Medicare insurance (Medicare B).
· The premiums you pay for Medicare Part D insurance.
· A program to stop smoking and for prescription medicines to alleviate nicotine withdrawal.
. A weight-loss program as treatment for a specific disease (including obesity) diagnosed by a doctor.
· Medical treatment at a center for drug or alcohol addiction.
· Medical aids such as eyeglasses, contact lenses, hearing aids, braces, crutches, wheelchairs, and guide dogs, including the cost of maintaining them.
· Surgery to improve defective vision, such as laser eye surgery or radial keratotomy.
· Lodging expenses (but not meals) while away from home to receive medical care provided by a physician in a hospital or a medical care facility related to a hospital, provided there was no significant element of personal pleasure, recreation, or vacation in the travel. Don't deduct more than $50 a night for each person who meets the requirements in Pub. 502 under Lodging.
· Ambulance service and other travel costs to get medical care. If you used your own car, you can claim what you spent for gas and oil to go to and from the place you received the care; or you can claim 18 cents a mile. Add parking and tolls to the amount you claim under either method.
· Cost of breast pumps and supplies that assist lactation.
Examples of Medical and Dental Payments You Can't Deduct
· The cost of diet food.
· Cosmetic surgery unless it was necessary to improve a deformity related to a congenital abnormality, an injury from an accident or trauma, or a disfiguring disease.
· Life insurance or income protection policies.
· The Medicare tax on your wages and tips or the Medicare tax paid as part of the self-employment tax or household employment taxes. If you were age 65 or older but not entitled to social security benefits, you can deduct premiums you voluntarily paid for Medicare A coverage.
· Nursing care for a healthy baby. But you may be able to take a credit for the amount you paid. See the Instructions for Form 2441.
· Illegal operations or drugs.
· Imported drugs not approved by the U.S. Food and Drug Administration (FDA). This includes foreign-made versions of U.S.-approved drugs manufactured without FDA approval. . Nonprescription medicines, other than insulin (including nicotine gum and certain nicotine patches).
· Travel your doctor told you to take for rest or a change.
· Funeral, burial, or cremation costs
· Interest You Paid
· Home Mortgage Interest
· Gifts to Charity
· Investment Interest
· Casualty and Theft Losses
Once you have completed the above tasks, you are all set to go meet your Tax Professional and file your tax away. And remember to maximize your deductions from 401-K additional contributions, IRA elections, Donations and more. After reading this you can't say you were not warned.