April 15th will be here sooner than you think. If you haven’t gotten your information together to file your 1040 with the IRS, you’ll need to start soon.
You will need to bring documents to show all your income for the year. These documents may include:
W-2s from your employers
1099-MISC forms for self-employment income
1099-INT (interest) and 1099-DIV (dividends) forms
1099-B forms showing brokerage trades in stocks and bonds
K-1 forms for income from a partnership, small business, or trust,
1099-SSA form showing Social Security received
The IRS receives copies of all your tax documents so you can request copies from the IRS. You can either do this yourself, or you can have your tax accountant do it.
There are three ways to get copies of your tax documents yourself:
Use the Get Transcript Online application on the IRS Web site. What you will be asking for is a copy of your Wage and Income Transcript. You will need to specify which year you are requesting. Be aware, that the wage and income transcript for 2013 may not be completely up to date until July 2014. You will need to register with the IRS Web site and confirm your identity. Free W-2 Tax Forms Online
Mail or fax Form 4506-T to the IRS. This form is used to request transcripts of various tax documents. To request the income documents, check the box for line 8, “Form W-2, Form 1099 series, Form 1098 series, or Form 5498 series transcript.” The IRS will mail out the transcript, usually in about ten business days.
Visit a local IRS taxpayer assistance center. An IRS agent can print out the wage and income transcript for you.
If you are Missing Form W-2
Ask your employer to send new a copy of your Form W-2. Some employers charge a nominal fee for this service. Employers are required by law to keep copies of your W-2 forms and other payroll information for at least four years.
If you are Missing Form 1099
Banks may have tax documents available for downloading from their web site, or you can call their customer service number to get a new 1099-INT mailed to you.
Investment brokers will be able to mail you a copies of Form 1099-B and 1099-DIV to report stock trading and dividend activity. Or you might be able to download copies from the brokerage web site. Be sure to download a copy of your year-end statement or a realized gain/loss report, as information in those reports can supplement the information found on the Form 1099-B.
If you earned more than $600 as a consultant or independent contractor, your client is required to send you a 1099-MISC to report your income. Even if you didn’t receive a 1099-MISC, you are still required to report the income to the IRS. Consider contacting your client for a copy of the missing 1099-MISC.
For other types of 1099 forms, contact the organization responsible for issuing the tax form.
Alternatively, your accountant can request a copy of the wage and income transcript from the IRS, and the IRS can fax the transcript directly to your accountant’s office. To do this, you will need to authorize your accountant to talk to the IRS on your behalf.
Here are the top 5 deductions that can help reduce income tax liability
Deductible State and Local Taxes
State and local taxes that you pay throughout the year may be deductible on yourFederal tax return. You can deduct either the state/local income tax that’s withheld from your paychecks or the state/locally-imposed general sales tax on retail items, but not both. If there is no state income tax where you live, the sales tax option would obviously be the one you chose to deduct. However, in states with both income tax and sales tax, you will want to calculate which is the highest, and then use that amount for the deduction on your tax return. The IRS provides a standard sales tax deduction based on your income, or you can keep all your receipts and add up the exact total you paid in sales tax to determine your deduction amount. Keep in mind that sales tax on large ticket items (such as boats, cars, or motorcycles) can be added on to the standard sales tax deduction. These non-business taxes must be claimed as an itemized deduction onForm 1040, Schedule A (Itemized Deductions).
Charitable Contribution Deductions
If you donate money or property to a qualified charitable organization, your contributions may be deductible on your Federal income tax return. As long as you itemize your deductions, you can deduct cash contributions as well as the value of donated items. In most cases, you can up to 50% of your adjusted gross income (AGI). While donating your time is not deductible, any expenses that you pay out-of-pocket may be eligible for the deduction (including gas, cooking ingredients, or postage). Note that anycharitable contributions over $250 will require proof, usually in the form of acknowledgment from the charitable organization (such as a receipt). For more information, please refer to IRS Publication 526 (Charitable Contributions).
Deductible Interest Expenses
In general, you cannot deduct personal interest on your income tax return. However, you are allowed to deduct interest that you paid on certain debts (including student loans and home mortgage loans) as long as you are legally liable for the debt. For those with large mortgages or high-interest loans, this can be a big tax savings. In order to deduct mortgage interest, you must itemize your deductions. For more information about the home mortgage interest deduction, please refer toIRS Publication 936. Student loan interest, on the other hand, can be deducted whether you itemize or claim the standard deduction. For more information about the student loan interest deduction, please refer to IRS Publication 970 (Tax Benefits for Education).
Deductible Job Hunting Expenses
If you have been looking for a new job in the same line of work, you may be eligible to claim atax deduction for some of your job hunting expenses. People who are searching for a job in their present occupation can deduct certain costs — such as résumé creation, transportation, lodging, employment agency fees, and even meals. However, you are not allowed to deduct job hunting expenses if you’re seeking a job for the first time. Job search expenses are categorized as a miscellaneous itemized deduction. For more information about tax-deductible job hunting expenses, please refer toIRS Publication 529 (Miscellaneous Deductions).
IRA Deductions
Money that’s invested into Individual Retirement Arrangements (IRAs) may be deducted on your tax return, depending on the type of IRA you have. Note that Roth IRA contributions are not tax-deductible. However, you may be eligible to deduct the amount you invest into a Traditional IRA. To claim atax deduction, there are certain qualifications regarding age, marital status, contribution limits, and whether you have a retirement plan through your employer. Taxpayers who are age 50 or older (in 2014) may be able to deduct up to $6,500. For more information about IRA deduction limits, please refer to IRS Publication 590 (Individual Retirement Arrangements).
Information provided by Joe Bazzano; CPA/Certified Business Exit Consultant, Bazzano & Rosenbloom