Lake Minnetonka tax preparation time may seem a long way from now, but with 2016 rapidly coming to a close it’s never too early to begin thinking about your 2016 taxes. According to the U.S. government, it is estimated that approximately 60% of individual taxpayers use paid tax preparers to fill out, calculate and complete their income tax returns. If you’re included in that 60% it’s probably a good idea to at least be thinking about your plans – it could mean the difference between having a good experience and a bad one.
Some tax preparers choose to meet with you directly to get the information they need, while others will have you fill out a questionnaire. This article will focus on ten steps you can take regarding your Lake Minnetonka tax preparation and planning with only a few weeks left in the year.
Your Lake Minnetonka Tax Preparation To-do-List
Select a preparer
If you’re contemplating using an accounting professional to handle your Lake Minnetonka tax preparation, it’s a good time to start looking for one. One of the best sources for referrals of good tax preparers is to ask friends, business associates, your lawyer or your banker. During the consideration process, make sure the candidate you’re thinking of retaining has a Preparer Tax Identification Number (PTIN) confirming that he or she is qualified. The PTIN is proof that person is authorized to prepare federal income tax returns. The next step in choosing a preparer is to ask questions about the preparation fees. Nobody likes surprises – especially at tax time – so understand what the charges will be ahead of time. Most preparation fees depend on the complexity of your return and the time it takes to complete the various information requirements, but most tax preparers can give you a price range so you’ll know what to expect. A word of advice: Don’t do business with a tax preparer that will charge you a percentage of your refund.
Set up an appointment
Because experienced tax preparers are very busy during the peak “tax season,” its best to schedule an appointment in advance – even if it’s for late January or early February – just to make sure you can get on their appointment calendar. Of course, if you’re expecting a refund, the sooner you can get your information together and meet with your tax preparer, the sooner you can file and receive your refund.
Gather your information
Under normal circumstances by the end of January you will likely receive a number of pieces of information you’ll need to give your tax preparer to complete your returns. Here are some of the most common forms:
• Form W-2 if you were employed
• Form SSA-1099 if you received Social Security benefits
• 1099s to report various additional sources of income (especially if you were an independent contractor)
• Form 1095-A to report information from the federal government marketplace from where you bought your health insurance coverage
• 1098s reporting mortgage interest paid, student loan interest paid, or college tuition payments
• Form W-2Gs to report gambling winnings
• Schedule K-1s to report income or loss from business entities in which you have an ownership interest
Collect your receipts
If you choose to itemize personal deductions rather than claiming a standard deduction, you’ll need a greater degree of verification and proof in the form of receipts. If you’re itemizing, collect the receipts (or cancelled checks) you have for such things as medical costs not covered by or reimbursed by health insurance, property taxes and employment-related expenses.
Assemble your charitable contribution records
If you choose to itemize deductions, you’ll need to have detailed records to legally claim any tax write-off. Charitable contributions of $250 or more require a written confirmation from the charity verifying the contribution and stating that it was a qualifying donation.
Be prepared for tax law changes
Your Lake Minnetonka tax preparation expert should be able to help you be aware of any new tax rules and regulations so you can avoid any unpleasant surprises. The individual healthcare mandate (the Affordable Healthcare Act) created a myriad of changes, as many will remember. We recommend asking your tax preparer what changes, if any, may affect you this year or you can go online to www.irs.gov.
Provide a list of personal info
Give your tax preparer information such as your Social Security number and those for each dependent you claim on your returns. In addition, list the addresses of real estate you own, including a second home or rental property, if applicable. Your tax preparer may ask for additional information on these properties, as well.
Will you file for an extension?
If you know now that you’ll need additional time to complete your tax returns prior to the April 17th deadline (normally the 15th, but the 15th is on Saturday in 2017 so you'll have two extra days), alert your tax preparer. More often than not, items like Schedule K-1s can cause taxpayers to file for an automatic 6-month extension.
Decide what to do with you refund
If you’re entitled to a tax refund, there are several options as to the instructions you can give to the IRS (the federal government) to do.
- Have some or all of it applied to your income tax bill on your next return.
- Have them send you a check or use direct deposit into a designated account.
- Contribute some or all of the refund to certain types of accounts for the expressed purpose of purchasing U.S. Savings Bonds through Treasury Direct.
Locate a copy of last year’s tax return
If you choose a new Lake Minnetonka tax preparation professional you’ve not worked with before, it will be helpful for him or her to have access to information on the previous year’s return. For example, payers of interest and dividends, and information on your favorite charities would be important reminders as they rarely change from one year to the next.
You can find more articles pertaining to Lake Minnetonka tax preparation in the Taxes section of our site below Lake Minnetonka Real Estate Categories in the column to your right.
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