As the new year begins, you may want to begin planning and preparing to file your income tax return. While the return is not due until April 15, 2019, you will start receiving tax information forms in January. One recommended practice is to create a filing system so you have all the necessary information to complete your tax return.
The following categories, tax documents and personal information should be considered when creating your filing system.
- Family Information — Your Social Security number or tax ID number. The Social Security numbers for your spouse or dependent children. Dates of birth for family members. Income for adult dependents. Childcare records and payments.
- Employment Information — Forms W-2 from all employers. Forms 1099-MISC or Schedule K-1 reflecting self-employment income. Business expenditures and income.
- Retirement Amounts — Forms 1099-R for payments from IRAs, annuities and other retirement plans. Forms 1099-SSA for Social Security payments.
- Sales or Interest — Interest on Forms 1099-INT, 1099-OID or 1099-DIV. HSA amounts on Forms 1099-SA. Property sales on Forms 1099-B or 1099-S.
- Other Income — Rental income, expenses and cost of purchase. Hobby income, prizes income and trust income. Any other Forms 1099-MISC. State tax refund.
- Taxes — State and local income. Vehicle and property tax.
- Medical — All payments for prescriptions, clinics, hospitals and doctors. Form 1095A, Form 1095B or Form 1095C for your medical insurance plan.
- Education — Form 1098-T or Form 1098-E. Qualified educational tuition, fees and expenses.
- Charitable — Cash and noncash gift receipts.
If you itemize deductions, you must have documentation to substantiate your charitable gift amounts. Charitable giving documents will vary depending upon the type and value of the gift. Gifts of cash are substantiated by a receipt from the organization or reliable written records. Cash gifts of any amount are deductible only if you have reliable written records, such as a bank record or a receipt from the charity with the amount and date of the gift.
There are specific requirements for gifts valued at $250 or more. The charity must send you a receipt stating the amount of your gift. Normally, the receipt indicates that the charity provided no goods or services to the donor. You must receive the receipt prior to filing your tax return.
If you make charitable gifts through payroll deductions, you must have a written record. Generally, you must retain a pay stub or Form W-2 that describes the amount withheld by the employer for the charitable gift and a pledge card or other document prepared by the charitable donee organizations. The pledge card or other document must also state that the charitable organization does not provide goods or services in whole or partial consideration for the contribution.
A volunteer may deduct expenses that are directly related to his or her volunteer work for a charitable organization. For this purpose, the volunteer must maintain records of the expenditures. In addition, the charity should send the volunteer a statement that describes the volunteer’s activities and indicates whether any goods or services were transferred by the charity to the volunteer in exchange for his or her efforts.