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If you're self-employed,
you have a bit more work to get organized. Track down
all receipts and documentation for business-related
expenses, from the mileage records you kept when using
your car for business to the office equipment and supplies
you bought to the utility bills you paid to keep the
home-office lights on.
IRS interest
in your other assets
Wage income isn't the only earnings that the IRS taxes.
Are you saving money for your kid's college, a new house
or retirement? Good for you -- and the taxman. Interest
earned on most savings accounts is taxable.
You should get statements from each
of the account holders, as well as formal tax forms.
Copies of the forms also go to the IRS.
For interest earnings, these documents
are typically Form 1099-INT.
If you've branched out into stocks
or mutual funds, you should get a Form 1099-DIV for
each stock, mutual fund or money market account. Reports
on the proceeds from broker transactions, if you use
one, will be sent to you on a Form 1099-B.
Just like with your final paycheck
stub, hang onto your year-end financial statements to
compare with the official final tax documents.
That pesky
miscellaneous income
Did you get a state tax refund last year? Did you rent
out that old house you fixed up? Did you finally settle
into retirement thanks to those monthly pension checks?
There's a place for each of these on your tax return,
so start getting this paperwork in order, too.
State and federal tax collectors
work together. In the case of state tax refunds, that
means the Form 1099-G you get detailing your refund
also goes to the IRS, so hang on to your copy and report
it.
Rental property can provide a nice
boost to your balance sheet. But make sure you keep
track of all it cost you to keep your tenants happy.
These expenses can be used to offset your rent income,
and that means less of your investment property earnings
are taxable.
Some retirement
payouts are taxable, at least in part. To help you
determine exactly how much you owe you'll get a Form
1099-R showing how much was paid to you during the year.
But what if it wasn't such a good
year financially, let's say you were out of work for
a while and collected unemployment. Sorry, but unemployment
is taxable. You'll get a separate Form 1099-G for this,
so it needs to go into your filing preparation package.
Tax trimming
starts at home
OK, you know what information you'll need to report
your income. Now it's time to do the pre-filing preparation
that could help you trim the taxable amount.
Costs related to your home
are a good place to start.
Homeowners know the value of a mortgage.
Not only does the loan get you into your house, but
the interest you pay on it is deductible. Your lender
will send you a Form 1098 with this amount. You can
check out your loan amortization schedule and get an
idea of just what the deductible interest amount will
be.
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