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Tax time can be hectic, even stressful. Start your planning today by getting all common -- and not so common -- paperwork in order
Ask many Americans about their experience with tax time and they are likely to describe lots of paperwork, confusing rules, and late nights on their computer. But it doesn't have to be that way. Getting organized now -- instead of waiting until the days before April 15 -- may help streamline your tax preparation and help you identify deductions that you might otherwise overlook in the last-minute rush.
You'll need the right paperwork to get started (see table below), but you may want to consult a tax advisor to determine whether you need to consider additional factors that are unique to your situation.
Tax Preparation Documents
Why You Need It
Form W-2 from your employer
The starting point for determining your taxable income.
Form 1099 and other statements from investment firms
Helps you compute capital gains, which are taxable, or capital losses, which you may be able to deduct. Dividends and interest are taxable at ordinary income tax rates. Contributions to a traditional IRA may be tax deductible if you meet income thresholds established by the IRS.
Real estate records
You may be able to deduct mortgage interest and real estate taxes. Expenses associated with investment real estate may be deductible. If you sell real estate at a profit, you may be required to pay taxes on a portion of the gain.
After you have accounted for the most common aspects of tax preparation, dig a little deeper to discover other areas of your life that may offer tax breaks.
Parenthood - Children are not just a blessing to your family. They also bring with them a host of potential tax breaks.
Lesser-Known Deductions - You may be able to benefit from either a tax deduction or a tax credit if you had any of these types of expenses during 2014.
These are just a few of the tax savings that may await you come April 15. Of course, your individual circumstances will determine if you are eligible for these and other tax breaks. Your tax professional should be able to provide more information on what you do and don't qualify for.
This communication is not intended to be tax advice and should not be treated as such. Each individual's situation is different. You should contact your tax professional to discuss your personal situation.
1Source: TurboTax, "Birth of a Child," updated for tax year 2014.
February 2015 - Because of the possibility of human or mechanical error by Wealth Management Systems Inc. or its sources, neither Wealth Management Systems Inc. nor its sources guarantees the accuracy, adequacy, completeness or availability of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. In no event shall Wealth Management Systems Inc. be liable for any indirect, special or consequential damages in connection with subscriber's or others' use of the content.
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