It’s that time of year again. We have started up a new membership at the gym, thrown out the rest of the Christmas treats, stopped checking our weight (so we don’t get depressed at how many pounds we gained), have come up with a creative way to turn “19” into “20” on our checks, and now we’re starting to receive tax documents (W-2s, 1099s, etc.) in the mail.
At our CPA firm, we like to say that getting ready to prepare your tax return is like trying to eat an elephant. The best way to do that, is to eat meal sized portions, don’t try to do it all at once. So here are some simple organizing suggestions to help you “eat your elephant.”
First, create a folder to put all the documents you receive into. Losing important documents is usually the number one problem. So don’t intend to put them somewhere safe, instead, have a place to put them where you will find them later when you need them.
Second, start gathering other information, one subject at a time. Take breaks in between accomplishing each subject. (Breaks could be hours, days, or even a week.)
Some “subjects” to work on… You might qualify to take actual Itemized Deductions instead of taking the Standard Deduction, (Standard Deduction for 2019 is $12,200 for Single, $18,350 for Head of Household, and $24,400 for Married Filing Joint), then start with…
A) TAXES: what did you pay the DMV for Auto Registrations; any major purchases (cars, furniture, remodel, new roof, etc.) find out the Sales Tax you paid on each; state estimated tax payments made; property taxes paid.
B) INTEREST: usually your home mortgage statement. NOTE: Home Equity Loan interest is usually not deductible (talk to a professional tax preparer about special considerations); RV or Vacation Home Interest
C) CHARITY CONTRIBUTIONS: Usually, if you gave more than $250 to a charity, you will have a statement from each of them telling you what you gave, if less than $250, then make up a list of all you gave; non-cash charity gifts will need an itemized list of what gave, original cost, current value and date given as well as the name and address of the charity it was given to
D) GAMING LOSSES: (if you had gaming winnings) gather information to back up the gaming losses you incurred
E) RENTALS: (if you have any) make a list of all related income and expenses
F) SMALL BUSINESS: (if you had a self-employed business) make a list of all related income and expenses
G) AUTO MILEAGE/ACTUAL EXPENSES: (if you use your auto for business purposes) you should have kept a log for mileage, also, you may be able to take other auto related expenses, so write down all related expenses, such as repairs, gas, oil, tires, insurance, registration, washing, etc.
H) OFFICE IN HOME: (if you use an exclusive part of your home for business purposes) you may be able to deduct some of them against business income, so write down all your repairs, insurance, utilities, property tax, mortgage interest, etc.
There are a lot of other subjects which might be related to a tax return besides the above, but this list should be about all many folks will need.
Did you hear? Proverbs 24:27 says, “Prepare your work outside; get everything ready for yourself in the field, and after that build your house.”
Kelly Bullis is a Certified Public Accountant in Carson City. Contact him at 882-4459. On the web at BullisAndCo.com Also on Facebook.