Your Tax-Preparation Checklist
January 7, 2022 by Interchange Capital Partners
By Ahmie Baum
With everything the past two years have thrown at us, the last thing you probably feel like doing is thinking about taxes. But, like it or not, tax season is here, and the better prepared you are, the sooner you can shake off that stress and spend your time doing what you love instead. And since there’s nothing worse than getting close to finalizing your taxes only to realize you’re missing an important document, we’ve created a tax-preparation checklist for you to follow to help make sure you have all your ducks in a row. While we do not provide tax advice, we hope you find this checklist useful.
Gather Your Personal & Income Information
You’ll probably start receiving various tax documents virtually or in the mail soon, so instead of letting them sit in a pile on your counter, create an organized system for the following.
- Form W-2: These are issued by employers and show your wages and tax withholdings. They are supposed to be mailed by January 31.
- Form 1099-MISC: These report income you have received as an independent contractor or freelancer. You should receive one from each person or company that pays you.
- Form 1099-INT: This form will show any interest you have earned.
- Form 1099-R: This form reports income received from annuities, IRAs, or pensions.
- Form 1099-DIV: Any dividend income you earn is reported on this form.
- Form 1099-B or 1099-S: You will receive these if you have any income from the sale of property or stock.
- Form 1098: You will get this from your mortgage company reporting the interest that you paid.
- Form 1098-T: This reports payments of qualified tuition and expenses.
- Form 1095-A or 1095-C: These forms report your healthcare coverage for the year and your premium tax credit, if applicable.
- Schedule K-1 (Form 1065, Form 1120S, or Form 1041): This reports income for a partner, a shareholder, or an income beneficiary of an estate or trust. The Schedule K-1 normal deadline can be as late as April 15th.
- Form 1098-E for student loan interest paid, or loan statements for student loans received
- Form 1098-T for tuition paid or receipts from the institution you or your dependents attend
- Receipts for any qualifying energy-efficient home improvements
- Records of IRA contributions made during the year
- SEP, SIMPLE, and other self-employed pension plan information
- Records of medical savings account (MSA) contributions
- Moving expense records
- Self-employed health insurance payment records
- Alimony you paid
If you want your tax-filing experience to be painless, you’ll also want to make sure that you have all of your and your dependents’ personal information available, such as:
- Social Security numbers and birth dates
- Copies of last year’s tax return (helpful, but not required)
- Bank account number and routing number, if you wish to have your refund deposited directly into your account
Organize Your Documents for Itemization
Also, if you itemize your deductions, you’ll need records to include your totals and provide proof.
Deductions and Credits
- Childcare costs: provider’s name, address, tax ID, and the amount paid
- Education costs: Form 1098-T, education expenses
- Adoption costs: SSN of the child; records of legal, medical, and transportation costs
- Form 1098: Mortgage interest, private mortgage insurance (PMI), and points you paid
- Investment interest expenses
- Charitable donations: cash amounts and official charity receipts
- Medical and dental expenses paid
- Casualty and theft losses: the amount of damage, insurance reimbursements
- Records/amounts of other miscellaneous tax deductions: union dues; unreimbursed employee expenses (uniforms, supplies, seminars, continuing education, publications, travel, etc.)
- Records of home business expenses
- State and local income tax
- Real estate tax
- Personal property tax
Incorporate Possible Changes
Okay, so that’s the nitty-gritty of what you’ll need in front of you to thoroughly fill out your tax return. But there are also a few things to think about that could impact how you file, such as any changes that have occurred this year. Did you add another child to your family? Did one of your children start college? Did you start taking withdrawals from a retirement account? All these changes need to be reflected on your tax return but won’t show up on prior returns.
More than personal changes, there may be changes to federal or state tax law that you should be aware of. While the future of the Build Back Better Act is still unsure, the proposed tax changes could have major implications for your financial situation, such as the phasing out of backdoor Roths, new surcharges on high-income earners, and changes to taxes for businesses. (1)
Specifically, you should stay on top of annual changes to retirement plan contribution limits. For the 2021 tax year, you can put up to $6,000 in any type of IRA. If you are over age 50, that amount goes up to $7,000 thanks to the $1,000 catch-up contribution. Annual contribution limits for 401(k)s, 403(b)s, and most 457 plans are $19,500. If you are 50 or older, your yearly contribution limit goes up to $26,000. And if you are eligible to contribute to an HSA, you can save $3,600 if you have single medical coverage and $7,200 if you are covered under a qualifying family plan. If you are 55 or older, those limits go up another $1,000. Keep in mind that for IRAs and HSAs, you have until April 15th, 2022, to contribute for the 2021 tax year.
A knowledgeable financial professional can help you understand any tax law changes and how they affect you.
Make a Plan for the Future
This has been an overwhelming year for many, and it’s important to get your 2021 tax return filed properly. It is just as important to look at the bigger picture of taxes in general, and to make sure you are optimizing all the tools available to you to limit your tax liability.
Taxes are complicated, to put it lightly, so why not enlist all the help you can get? If you want to be proactive about tax-related financial planning opportunities, and you don’t have a trusted planner yet, we would love to help you experience confidence in every aspect of your financial future. Get started today by calling our office at 412-307-4230 or emailing firstname.lastname@example.org to schedule an introductory appointment.
Ahmie E. Baum is the CEO and founder of Interchange Capital Partners, an independent registered investment advisory firm providing collaborative, comprehensive, and disciplined wealth management around Transition Planning Unlocking a Lifetime of Work. With over 40 years of experience, Ahmie specializes in serving individuals, professionals, and family-owned businesses, helping them manage the complexity that comes with their unique circumstances. He is known for giving his clients guidance, education, and resources to make wise financial decisions that help them protect their wealth while achieving their goals. Ahmie and his firm strive to go above and beyond with their unparalleled client service and family office services that help their clients experience confidence in their future.
Ahmie graduated from the University of Pittsburgh with a bachelor’s degree in psychology and holds the Executive Certificate in Financial Planning from Duquesne University School of Leadership and Professional Advancement. He is also a CERTIFIED FINANCIAL PLANNER™ professional. He recently received the Certificate for Family Business Advising (CFBA) from the Family Firm Institute. He spent 42 years working at EF Hutton and UBS, where he earned the prestigious Wealth Advisor designation. Nationally recognized, Ahmie has been named in the past to the Barron’s Top 1,000 Financial Advisor List. When he’s not working, Ahmie enjoys spending time with his wife, Sara, their three children, and their granddaughter. He also enjoys investing in his health through yoga, meditation, and plant-based eating. His other hobbies include woodturning, golf, reading, listening to music, and biking. He is active in his community and serves as the Foundation Chair of the Jewish Federation Community Foundation of Greater Pittsburgh and supports the Big Brothers Big Sisters of America (BBBS). To learn more about Ahmie, connect with him on LinkedIn. You can also watch his latest webinar on The Hidden Dangers of Not Having an Exit Plan.
Interchange Capital Partners, LLC, (“INTERCHANGE CAPITAL PARTNERS”) is a registered investment adviser with the Securities and Exchange Commission providing investment advisory and financial planning services. Any reference to the terms “registered investment adviser” or “registered” does not imply that INTERCHANGE CAPITAL PARTNERS or any person associated with INTERCHANGE CAPITAL PARTNERS has achieved a certain level of skill or training. A copy of INTERCHANGE CAPITAL PARTNERS’s current written disclosure (ADV 2A Firm Brochure) discussing our advisory services and fees is available for your review upon request. INTERCHANGE CAPITAL PARTNERS, in addition to providing investment advisory and financial planning services, provides business consulting services. In connection with its business consulting services, INTERCHANGE CAPITAL PARTNERS does not provide tax or legal advice.
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