April may seem a long way off, but it will be here before you know it. Are you ready for tax filing? Rather than putting this task off until the last minute, reduce your stress and take steps to be prepared. Before starting on your tax return, gather all necessary tax documents and additional information such as:
- Social Security numbers and dates of birth for you, your spouse and dependents
- Child care, education and adoption costs
- W-2 forms for all employers for you and your spouse
- Investment income forms
- Alimony information
- Social Security benefits
- Miscellaneous income
- Form 1098-E for student loan interest
- Form 1098 for home mortgage interest
- Charitable donations
- Medical and dental expenses
- Real estate taxes
- Rental property incomes and expenses
If you have kept careful records, the above items will be easy to find. Keeping records organized not only helps at tax time but can also make other things easier, like filing insurance claims or getting a loan. Good records will help you:
- Identify sources of income. You may receive money or property from a variety of sources. Your records can identify the sources of your income. You need this information to separate business from nonbusiness income and taxable from nontaxable income.
- Keep track of expenses. You may forget an expense unless you record it when it occurs. You can use your records to identify deductible expenses for your tax return.
- Keep track of the basis of property. You need to keep records that show the basis of your property. The Internal Revenue Service defines basis as "the amount of your investment in property for tax purposes."
- Support items reported on tax returns. You must keep records in case the Internal Revenue Service has a question about an item on your return. Good records will help you explain any item and arrive at the correct tax with a minimum of effort. If you do not have records, you may have to spend time getting statements and receipts from various sources. If you cannot produce the correct documents, you may have to pay additional tax and be subject to penalties.
If you have questions about filing your tax return, call 800-342-9647 and ask to speak with a Military OneSource tax consultant. Trained tax consultants are available (free for those who are eligible) Monday through Friday, 8 a.m. to 10 p.m. EST/EDT year-round and with extended hours during tax season: 7 days a week from 7 a.m. to 11 p.m., EST/EDT. Free tax preparation software is also available through Military OneSource and at select Volunteer Income Tax Assistance locations where you can also find tax consultants who can sit down with you one-on-one and provide tax counseling and prepare your tax returns.