5 Important Pieces of Information Needed to File Your Taxes
If you’re like most people, filing your taxes also means a great deal of confusion and stress. The good news is that by arming yourself with the right information, you can simplify the process significantly. Here are the 5 important pieces of information you need before filing your taxes.
1. Your Income Information
It’s vital that you know how much you’ve earned throughout the year and from which sources. If you are employed, you will receive a W-2 form from your employer. This form lists your total earnings, as well as deductions such as FICA taxes, state and federal tax withholdings, and others.
If you are self-employed, you will receive a 1099 form from each business that has paid you over $600 throughout the year. You are responsible for keeping track of your income if you fall into this category.
2. Dependents Information
Another essential part of filing your taxes is knowing who your dependents are. Dependents could be your children or other family members that you financially support. Knowing how many dependents you have can significantly impact the amount of your tax refund.
3. Receipts for Deductibles
Another necessary piece of information is your receipts for deductibles such as charitable donations, mortgage interest, student loan interest, and business expenses. These receipts can significantly reduce the amount of taxes you owe.
4. Information About Retirement Savings Accounts
Knowing how much you’ve contributed to your retirement savings accounts such as an IRA (Individual Retirement Account) or 401k, and the specific type of account is important. Contributions to these accounts can help lower the amount of taxable income that you have.
5. The Right Tax Filing Status
Lastly, it’s essential that you choose the correct tax filing status. It determines the amount you owe in taxes or the number of refunds you receive. You can file as either single, married filing jointly, married filing separately, or as head of household. Be sure to choose the correct filing status to ensure you’re not left with any surprises come tax time.
Conclusion
By having these vital pieces of information, you can reduce the stress of filing your taxes significantly. Obtain your income information, know your dependents, keep receipts for deductibles, keep track of retirement savings, and ensure that you choose the correct tax filing status. Armed with this information, you can now file your taxes with confidence.
