Well, here we are and it’s time to ensure a smooth tax season. Seriously – even as a professional who preaches from the same gospel each year to all our clients, there are always a few that come in completely bamboozled by their documents. From the time that your W-2 is delivered (which, by the way, you should have!) until you actually sit down to file, there are only two things you HAVE to do:
Gather your documents…
The first step to a timely return is to have all your ducks in a row. Collate all the forms you’ll be collecting, like W-2s from employers, Form 1099s from banks and other payers, and Forms 1095-A from the Marketplace for those claiming the Premium Tax Credit. At the same time, you also will need a copy of your 2016 return. As you collect all this data, it’s also a great time to ensure that each of these institutions has your current mailing address.
In general, all these forms will begin arriving in January and you should have all the various 1099 forms by no later than the end of February. Yes, unfortunately, it always seems like 1099s show up last. Nonetheless, every one of these is critical to your return and taking the time (or exerting the patience) to gather them all will allow you to avoid refund delays and the need to file an amended return later.
Once you have all that information together, I also recommend that you Keep it all together.
The IRS reserves the right to examine any supporting documents for at least 5 years, so gathering it once and storing it once – and properly – can save you loads of time down the road. There’s a couple of ways to do this, especially with respect to how many of us receive statements digitally these days. For true paperwork, like W2s, 1099s, and legal documents like real estate transactions, obviously, you should seek to preserve the real document.
For items you’ve gotten emailed – which generally are not as “important” to the IRS or your tax preparer, storing it in a safe place in the cloud or on your computer is fine … just remember where you put it!
In nearly every case over my career, when returns – and subsequent refunds – took an inordinate amount of time, the culprit was documentation. The truth is, you can file taxes with limited amounts of “proof” but the process the IRS goes through to verify returns?
It’s just going to kick your name out and ask you to submit the paperwork before they accept the return. To put it simply: at that point, you’ll be trying to paddle upstream, against the current of millions of other returns and a system that is not designed to be expedient.
As Andrew Carnegie once said, “I’d suggest you put all your eggs in one basket and watch that basket.”
That advice, well over a century old, still rings true.