It’s Tax Time, do you know where you 1099s are?


Not many people like doing their taxes, and our tax code doesn’t always make it as easy as it should be, but the key to reducing your stress during tax filling season is maintaining good records and knowing where to find then when you sit down to do your taxes. You should have received your W2’s and 1099s by now. 1099 is the form your bank and brokerage firms will use to report any income (over $5.00) they paid to you. This income is reported to the IRS and you are sent a form. (If you did some work as a subcontractor you may also receive one from someone that paid you for work you did). They are supposed to be in the mail by January 31st which means you should have received them by now. If you have not, check first to see if you signed up for electronic delivery and if so they may be waiting on line for you. While the payer is responsible for getting them to you, you are responsible for reporting all income on them and cannot use the excuse “they never sent me one” as a reason not to declare the income. This is why it is important to keep good records even if you closed an account. So if you’re expecting one and did not come, find out what happened to it.

If you are itemizing deductions make sure you have all of your receipts and records ready.

Once you gathered all the documentation you are ready to do your taxes. Unless you have really complicated tax issues it is now pretty easy to do your taxes using any number of available tax software. Just follow their step by step instructions. You of course are responsible for the end result so make sure the tax software you choose is reliable. If you have not read my post about Credit Karma, please read it if you are considering their software. If your income is less than $66,000 you may qualify for free software and e-filing, check out your options on the IRS website. If you have to pay for software see if your financial institution offers a discount. I did my taxes with TaxAct this year. If you click on the word in this post it will take you to the website and you will save 20% if you sign up thought that link. Full disclosure they also say they will pay me $20.00 for anyone I refer through that link.

If you have a refund coming file as soon as you can. No reason to allow Uncle Sam to hold your money interest free any longer than you have to. If you want to lend him money buy a savings bond or a T-Bill. If you are getting a really big refund that may not be a good as you think and it will be a subject discussed in the near future.

Once you have completed the taxes it’s time to start thinking about next year’s taxes. This is always important but especially this year with the massive changes in the tax code. Don’t assume your taxes are going down, some people will actually see their taxes go up. You are at greatest risk if you have lots of dependents or high itemized deductions. The risk are even greater if you fall into both those buckets. You need to guesstimate next year’s taxes and make sure you are having enough withheld. How to do this will be the subject of another post.

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