Paying and filing taxes is essential for several reasons including safeguarding your credit score for loan qualification. It also prevents you from losing future refunds, especially those paid back for owed taxes. However, because filing taxes can be complicated based on your state laws and the tax preparer you work with, having all the required documents at hand helps you pursue the process effortlessly. In addition to proving your identity and the identities of your family, other documents you need include:
Social Security Details
Regardless of your working status when filing taxes, social security details are essential components for the process. The details contain your social security number, your tax identification number, and those of your spouse or dependents. The social security number, an essential component of your social security details, is a nine-digit number your relevant state government uses to keep track of your lifetime earnings and the number of years you work. These details are needed to help your tax preparer correctly file your taxes without missing names, spellings, and numbers matching your identification records by the government.
Social security details are also important when you retire or when applying for social security disability income. During this time, your government uses this information to assess your contribution to social security before determining your eligibility for disability and retirement benefits. Social security details are also vital when replacing your tax identification, especially in identity theft. Other social security details your tax preparer needs include your passport, state identification card, or driver’s license.
Income Statements
Also referred to as profit and loss statements, income statements show the profitability of your business over a specified period. If your business revenues are more than expenses, your income statements reveal your business’s net profit. Otherwise, if your costs exceed your gains, your income statements show a net loss. While filing taxes, your tax preparer needs income statements to indicate to authorities whether your business has profited or made losses within a specified period.
Income statements are also essential to help your tax preparer complete your tax W-2 Form. The W-2 Form is critical in reporting your paid wages and withheld taxes over one year. The Form is also vital in showing the number of jobs you’ve done over a year and if you’ve been to more than one workplace. Your tax preparer will use your income statements to file two or more W-forms for each employer you’ve worked for within that year, depending on the number of jobs you’ve had within a year. Additionally, other documents you bring along with your income statements include:
W-2G forms- also known as Gambling winnings and wage ration forms, your tax preparer will require W-2G forms {Form} if you had certain types of gambling winnings, you need to compare and rate with your net salary.
1099-R forms- these are internal revenue service {IRS} forms that report your taxable distributions for specific accounts, including retirement savings accounts. Your tax preparer needs your income statements 1099-R forms if you received distributions such as annuity, insurance contracts, retirement settlements, and pension.
Tax Deduction Documents
Tax deductions are deductions that lower your tax liability by reducing your taxable income. They are typical expenses you incur during the year that are applied against or subtracted from your gross income to figure out the amount of tax you owe the government. Some of the tax deduction documents lowering your taxable income include:
Forms 1040 or the Individual Tax Return Forms- Based on your state Internal Revenue Service regulations, you’ll need 1040 forms based on your age, filing status, and your gross income statement to lower your taxable bill. An individual tax return form is also essential regardless of whether you have a taxable income or not to help you file for credit or tax refund. The Form also allows you to itemize your deductions and claim expenses and tax credits.
Schedule A to form 1040 or Itemized Deduction form- An itemized deduction form reduces the tax you pay by deducting personal expenses from your gross income. This happens if your costs are more than the standard deductions set by your internal revenue service regulations. Some of the deductible expenses include medical, charitable donations, and mortgage interests.
Receipts of Expenses
Besides tax deduction forms and income statements, your tax preparer needs receipts of expenses for filing your taxes. Some of the costs you’ll bring receipts for include medical bills, donations, IRA {Individual retirement account} costs, and specified educational–related expenses.
