Accountants are eagerly awaiting your tax materials so they can begin preparing your tax return. Even if filing an extension due to late financial documents, like K-1s, or extenuating circumstances, accountants need your information sooner than later.
Once you submit your tax materials, your accountant can let you know what tax you’ll be paying or the amount you overpaid, along with any estimated taxes for the new year.
We find our clients often neglect to provide their accountants with all the necessary tax documents and information. There’s a long list, so we’ve included commonly needed items here to help you.
1. All 1099s
Sources of income are reported on W-2s as well as 1099s. Don’t forget about those received in paperless form or for accounts you can no longer access.
Your 1099s might come from:
- Work performed for various companies or individuals
- Banks and brokerages (if you have more than one, make sure to collect all of them)
- All individual stocks owned outside of a brokerage account (each company and/or transfer agent will issue its own 1099 for dividends)
- All retirement accounts (IRAs, pensions, annuities, etc.) issue a 1099-R
2. New Potential Income Sources
Include documents for any of these possibilities:
- IRA RMDs if you’ve turned 72 years of age or inherited an IRA. Speak with your accountant about the particular distribution requirements and tax consequences of inheriting from a sibling, parent, or friend.
- Inheritance of assets that will generate income
- Being named as a beneficiary of a trust that issues K-1s (with passive or active income)
- Purchase/conversion of property for income generation
3. Monetary Gifts
- Include records of any gifts over $16,000 to an individual in 2022 ($17,000 in 2023) or $32,000 ($34,000 in 2023) if made by a couple.
- Gifts under the limit don’t need to be reported to the IRS.
- Any gifts over the limit require the giver to file a Gift Tax Return.
4. Charitable Donations
The IRS has denied tax deductions to donors who don’t show proper acknowledgment for their donations to a charity. Collect and provide to your accountant:
- A list of all charities to which you donated (political organizations don’t count)
- Acknowledgment letters for donations of $250 or more. Receipts or letters must show the amount given, the portion that is tax deductible, and that the organization is a 501(c)3.
- Learn more in our article about charitable donations.
5. Health Insurance
Provide evidence of premium payments for:
- Self-insured or employer-paid plans. You’ll need Form 1095-B for Health insurance to show how much you paid and proof that you were covered in the tax year and not liable for the individual shared responsibility payment.
- Medicare supplemental insurance
- Medicare premiums B and D (which typically are reported on your Social Security SSA-1099), and IRMAA. If you are not having the premiums deducted from your Social Security benefits, then you need to keep track of payments and report them to your accountant. Learn more in our article about how Medicare can affect Social Security payments.
- Long-Term Care Insurance Premiums (these should stop once you begin to claim benefits)
6. Medical and Dental Expenses
Talk with your accountant about your ability to take these deductions based on your projected threshold of 7.5% of income. Then you’ll know whether it’s worth collecting receipts and information.
Collect documentation for these medical expenses:
- Co-payments
- Travel to and from medical care appointments (taxi, public transportation, and car mileage are eligible expenses)
- Incontinence products
- Durable medical equipment
- Wigs for disease-related hair loss
- Geriatric care managers
- Aides, if “on the books” (e.g., receiving a W-2)
- Prescription drugs (get a document from your pharmacy showing the total amount you paid during the tax year)
- See IRS Publication 502 (2021), Medical and Dental Expenses for a complete list.
7. Property Tax and Expenses
Produce proof of payment for:
- Property taxes (whether for co-op, condo, individual house, or multiple properties)
- Rental property expenses
8. Education Expenses, Credits, and Savings Plans
Education documents to gather include:
- 529 plans, which can be deducted from some state tax returns (for example, in New York State, up to $5,000 per contributing individual or $10,000 per couple can be deducted).
- 1098-T for a possible refund of tuition or related expenses