Are You Ready for Tax Season? Time to Gather Your Information for Your Tax Appointment
We are aware of what it takes to get ready for tax season. Are you ready for tax season? Like most taxpayers, you have the overwhelming task of pulling together all the records for your tax appointment. This blog is Part 2 of Tax Time 2019 Is Around the Corner, and has additional suggestions as to how to get ready for tax season.
How well do you maintain your tax records throughout the year?
Good question to ask yourself right about now because you can learn how to ward off the pain of getting ready for tax season next year. In Part 1 of Tax Time 2019 Is Around the Corner, Are You Ready? We made it clear that no matter how good your record keeping was, when you come to your tax appointment with full and accurate tax information you allow us more time to:
- Consider every possible legal deduction;
- Evaluate which income reporting methods and deductions are best suited to your situation;
- Explore current law changes that are affecting your tax status; and
- Talk about tax-planning alternatives that could reduce your future tax liability.
Additional Tax Time 2019 Transactions That Deserve Special Treatment
When you get ready for tax season, there are certain transactions that require special treatment on your tax return. It’s a good idea to invest a little extra preparation effort when you have had the following types of transactions:
Sales of Stock or Other Property:
All sales of stocks, bonds, securities, real estate, and any other property need to be reported on your return, even if you had no profit or loss. List each sale, and have purchase and sale documents available for each transaction.The purchase date, sale date, cost, and selling price must all be noted on your return. Make sure this information is part of the documents you bring to your appointment.
Gifted or Inherited Property:
When you sell property that was given to you, you need to determine when and for how much the original owner purchased it. If you sell property you inherited, you will need to know the original owner’s death date and the property’s value at that time. You may be able to find this on estate tax returns or in probate documents; otherwise, ask the executor.
As you get ready for tax season, did you know that the tax law provides special breaks for home sale gains? You may be able to exclude up to $500,000 of the gain from your primary home if you file a married joint return and meet certain ownership, occupancy, and holding period requirements. The maximum exclusion is $250,000 for others. Since the cost of improvements made on your home can also be used to reduce any gains, it is good practice to keep a record of them. The exclusion of gains applies only to a primary residence, so keeping a record of improvements to other property, such as your second home, is important. Be sure to bring a copy of the sale documents (usually the final closing escrow statement).
Regarding a new home purchase, be sure to bring a copy of the final closing escrow statement. Also, any expenses affiliated with the home purchase may be worth having supporting documentation as well, especially if the property is a rental income property. Many first time buyers consider buying a multifamily to help pay their mortgage and expenses.
Home Energy–Related Expenditures
If you installed a solar, geothermal, or wind power-generation system in your home or second home, please bring the details of the purchase and manufacturer’s credit qualification certification to your appointment. You may qualify for a substantial energy-related tax credit.
Identity theft is rampant and can impact your tax filings. Should you have reason to believe that your identity has been stolen, please contact this firm as soon as possible. The IRS provides special procedures for filing if you have had your identity stolen.
Car Expenses for Business
When you use one or more automobiles for business, list the expenses of each business vehicle separately. When claiming vehicle-related business expenses, the government requires your total mileage, business miles, and commuting miles for each business vehicle to be reported on your return, so be prepared to have those numbers available. Job-related vehicle expenses are not deductible by employees on their federal returns in years 2018 through 2025. However, some states, including California, still allow them. So, when you have non-reimbursable employee business expenses, continue to provide the information we note above in case the deduction is allowed for state taxes. And, if you did receive reimbursement for mileage through an employer, know the reimbursement amount. Make sure to know if it was included in your W-2.
You must prove cash contributions, regardless of the amount, with a bank record or written communication from the charity. For a charity, you must show the name of the charitable organization, date, and amount. Non-receipt cash donations put into a “Christmas kettle,” church collection plate, etc., are not deductible. For clothing and household contributions, that you donate, these items must be in good or better condition. Oh, and items such as undergarments and socks are not deductible. You must keep a record of each item you contribute that indicates the name and address of the charity, the date and location of the contribution, and a reasonable description of the property.
Contributions with a value under $250 and dropped off at an unattended location do not require a receipt. For contributions above $500, the record must include when and how the property was acquired and your cost basis in the property. For contributions above $5,000 and other types of contributions, please call this office for additional requirements.
Do you have questions as you get ready for tax season?
For any questions about assembling your tax data prior to your appointment, please give this office a call. Alex Franch, BS EA at 781.849.7200 or email the office at firstname.lastname@example.org to secure help with your small business accounting needs. Also, you may book an appointment online here and you can meet with any of our tax experts. We are available by appointment at our three convenient locations in Norwell, South Weymouth and Dedham, Massachusetts.
Alex Franch, BS EA
Alex is a Tax Specialist and Partner at Joseph Cahill & Associates / WorthTax. He has a diverse background including a Bachelor of Science from Boston College in Mathematics and extensive military service. Alex is an Enrolled Agent and has a decade of tax preparation experience. He is passionate about serving businesses with tax and financial planning strategies. Mr. Franch is licensed by the Financial Industry Regulatory Authority (FINRA). He holds a Series 6, 63, 65, and 7, and by the Commonwealth of Massachusetts Division of Insurance. Alex Franch is a registered representative of, and offers securities and investment advisory services through, Commonwealth Financial Network. He is a registered broker-dealer, Member FINRA/SIPC.
Sources and Resources
- Tax Time 2019 is Around the Corner, Are You Ready? Part 1
- 12 Easy Way to Get Your Personal Finances in Shape for 2019
- Holiday Gifts with Tax Benefits
- Protect Tax Data, Keep All Sensitive Tax Data Safe
- Tax Reform is Confusing Part 2
- Tax Reform is Confusing! Here is a Side by Side Comparison Part 1
- Natural Disaster Relief
- We Have a New Tax Preparation Office
- Emergency Savings: 67% of People Don’t Even Have $500 Emergency Fund
- Did You Donate to Charity?
- Don’t Expect the IRS to Take Your Word on Charitable Deductions – Substantiate
- Charitable Contribution: Tax Plan for Potential IRA-to-Charity Provision
- Home Office Tax Deduction Good or Bad?
- 529 Plan: Higher Education, Learning the Hard Way
- Minimizing Tax on Social Security Benefits
- Employee Business Expenses: Tax Reform Suspends Tax Deduction