Are you scrambling to get ready for tax time?
You aren’t alone. Millions of people wait until the last minute to take care of their taxes. With all of the last minute scrambling, you need to make sure you take the time to gather everything you need to do it correctly.
You might be asking: what do you need to file taxes? This post will answer that question for you.
Read below to learn what documents you need to get started.
1. W2 Form
If you work a job, then you will be getting a W2 form from your employer. This form lets the IRS know how much the company paid you and the taxes removed from your paycheck. Your employer will have until February to get this information to you.
Many companies now use a paystub generator online to process payments, which you can use to estimate this information in the meantime.
2. Investment Information
When you invest in the stock market and earn income, then you need to declare that on your taxes. You will need a 1099-DIV and 1099-B form from your investments that will indicate your capital gains and losses for the year.
Your IRA and pension distributions are on forms 1099-R and 8606.
Your rental income will also be declared if you invest in real estate.
3. Self-Employment Income
If you are finding success in your side hustle, then you need to report any earnings to the IRS.
If you’re freelancing and don’t receive any tax information, then you will need to track this information yourself to report it.
If you do regular business with a company, then they may send you a 1099 form. This form is submitted to the IRS and is needed to declare any income from these companies.
4. Interest Payments and Income
Do you have a mortgage or school loan payments?
If you do, these interest payments are considered a deduction on your taxes. A mortgage payment will provide you the 1098-E form and student loans will give you a 1098 form. These will tell you what you can deduct.
If you have your money in a bank account, you might be getting interest payments from your balance. You need to disclose this income on your taxes.
5. Business Deductions
Just like you declare any side income, you can also remove any business expenses on your taxes. Your total income is considered your total side income minus your expenses. This net profit is what you will pay taxes on.
The following are common business deductions:
- Phone line
- Internet connection
- Mileage
- Health insurance (if you don’t receive it from your place of work)
- Any dedicated workspace to your business
- Office supplies dedicated to your business
6. Charity Donations
Any charity donations you have given through the year are deductible. This is for both physical contributions and cash. Keep track of your total value and present it on your tax form.
7. Identification Proof
To do your taxes then you need to prove your identity.
When you file, you need to provide both your social security number and your date of birth for the IRS to accept your return.
What Do You Need to File Taxes: Final Thoughts
Now that you can answer the question: what do you need to file taxes, you can get started on your return. Don’t wait any longer, so you aren’t flying through the process right before it is due.
Are you looking for tips to get things done? Check out our productivty section to read our other content!