Are You Ready to File Your Taxes? 5 Things You Need to Do First 

2020 might be over, but there’s still one thing left on our collective to-do lists before we can officially wrap up the year. That’s right. It’s time to corral the documents and tackle your 2020 personal tax filings.

If there’s a good thing about taxes, it’s the sooner you file, the sooner you can move on and get your refund (fingers crossed!). Here are five prep steps to take in advance to make this year’s tax filing go smoothly.

Planning Personal Taxes


 1. Collect the documents.

Throughout January and February, you’ll receive a series of essential tax documents via mail or download from your employer(s), banks, and brokerage firms. Make a list of the forms you’re expecting, review them as you receive them to ensure they match your records, and create a designated place to save them. This way, you’ll significantly reduce any last-minute stress caused by missing or incorrect paperwork.

Common forms to expect include:

  • W-2 from your employer(s), which shows your wages and tips
  • 1099 forms that report other income you received during the year, like:
    • interest (Form 1099-INT)
    • dividend earnings (Form 1099-DIV)
    • capital gains or losses on investments (Form 1099-B)
    • retirement income (Form 1099-R)
    • Social Security income (Form SSA-1099)
    • sales of real estate (Form 1099-S)
    • non-employee compensation if you earned money as an independent contractor (Form 1099-MISC)
  • Form 1098 from your mortgage holder, which shows any mortgage interest you paid


2. Find last year’s tax return.

Even if you’re planning to work with the same tax advisor as last year, reviewing your past return provides a good reminder of the forms you should be looking for and the information you need to compile. It will also help you identify changes that you’ll want to call out for your tax advisor, like accounts you opened or closed during the year. 


3. Wrangle your receipts.

Your tax advisor can help you decide whether it’s more favorable to claim the standard deduction or itemize your deductions for your 2020 filing. Either way, in order to make that decision, you’ll need to have receipts for things like:

  • Medical and dental costs that weren’t covered by your health insurance or reimbursed through a health savings account (HSA) or flexible spending account (FSA)
  • Childcare expenses
  • Real estate taxes
  • Personal property taxes
  • Investment expenses
  • IRA contributions
  • Education expenses
  • Student loan interest paid 
  • Charitable giving for cash donations of $250 or more or “fair market value” for non-cash contributions


4. Compile and update your personal information.

Now’s the time to pull together current information for yourself as well as family members – full legal names, dates of birth, and Social Security numbers. 

Think about what other information your tax advisor will need, such as the addresses of vacation or rental property you own. You’ll also want to have records of any property you bought or sold during the year – the dates, the amount you paid, and how much you received from the sale. 


5. Make a refund plan. 

If you expect to receive a refund, you’ll have options. Think about what the best choice is for you and let your tax advisor know ahead of time. Refund options typically include:

  • Receiving a check or direct deposit into a checking or savings account
  • Contributing part or all of your refund to your IRA, HSA, or education savings accounts
  • Applying some or all of the refund toward your 2021 taxes. For example, if you pay quarterly estimated taxes, your refund could cover a portion of the first quarter’s estimated tax.

When it comes to income taxes, a little extra preparation goes a long way to making the process less stressful. McCoy Accounting Advisors can help you get your taxes – both personal and business – done right by maximizing your return and capitalizing on all available write-offs and tax credits. As part of your preparation, contact us to schedule a complimentary consultation. 

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