ALBANY, GA (WALB) - It's that time of the year when everyone is patiently waiting to receive those meticulous documents that you need to have for a successful visit at the tax office.
You may refer to them as the alphabet soup of forms: W-2s, 1099-S. If you misplace this paperwork, it can cost you money or even lead to an unwelcome call from the Internal Revenue Service (IRS).
Let's start with W-2s. According to Investopedia, it's the standard IRS form that employers are required to send employees at the end of each year.
By the end of this month, every employee should have a W-2 in the mailbox.
It's the summary of the payroll amounts and taxes that were paid to the employee in the applicable tax year.
The W-2 tells the employee what their employer reported to the IRS with regard to the employee's gross wages, federal withholding tax, Social Security tax, Medicare tax, and any state and local income taxes that were withheld.
It also includes amounts such as payments made for non-qualified benefit plans and dependent care benefits, like your company health insurance or 401K plan.
Those special deductions are often listed in the 11-14 boxes on the W-2 form. If you forget to check those boxes, you could be leaving money on the table.
According to Investopedia, the 1099 form provides information to the IRS about certain types of income from non-employment-related sources.
There are several 1099s, here the four most common forms:
- 1099-DIV: Dividends and Distributions, if you own a stock or mutual fund that pays dividends, you should receive this form.
- 1099-INT: Interest Income, you should receive this form if you have a checking, savings or another bank account that earns interest.
- 1099-MISC: Miscellaneous Income, you should receive this form if you worked for someone as an independent contractor.
- 1099-R: Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., if you received $10 or more from your IRA or one of the other sources of retirement income listed here, you should receive this form.
So if you've branched out into stocks or mutual funds, you should get a 1099-DIV form for each stock, mutual fund or money market account.
Saving for a new home or child's college?
That's also taxable. Get statements on those accounts.
Many residents often rush to file their taxes without having all the necessary paperwork.
"Most of the errors on tax returns are not errors of omission of mis-entering or mis-reporting but an error of omission, omitting the information from the tax return and failure to give that information to your tax preparer," Liberty Tax Service Chairman, John Hewitt explained.
Those ambitious entrepreneurs will have a bit more work. You'll have to gather all receipts and documentation for business-related expenses, from the mileage records you kept when using your car for business to the office supplies you bought.
Tally up those charitable contributions, business expenses, mortgage payments, and other common tax deductions.
"The most common thing missed is automobile expenses, so for example, if you have charitable deductions and give to charity and you use your vehicle to drive back and forth because you're an officer of the organization," Hewitt added.
And a big one, make sure you have the social security numbers and birth dates of your dependents from elderly parents to infants.
Now that you're all set, make sure you set an appointment with a credible tax professional that has a good rating with the Better Business Bureau.
According to Hewitt, residents should "find a preparer that digs for deductions to make sure that you get everything you're entitled to. Find someone who's going to give you advice on how to guide on your financial future."
Those of you who are a bit more tax savvy can file at home on tax software services like Turbo Tax.