As you get ready to file your taxes, one of the first things you will do is gather important records. To avoid refund delays, you should gather all year-end income documents before filing your tax return. It is important to have all the necessary documents on hand before you start to prepare your return because doing so helps ensure you file a complete and accurate tax return.
Here are some items you should have prior to starting your taxes:
Social Security numbers of everyone listed on the tax return. Many taxpayers have these number memorized. Still, it is a good idea to have them on hand to double check that the number on the tax return is correct. An SSN with one number wrong or two numbers switched will cause processing delays.
Bank account and routing numbers. People will need these for direct deposit refunds. Direct deposit is the fastest way for taxpayers to get their money and avoids a check getting lost, stolen or returned to IRS as undeliverable.
Forms W-2 (Wage and Tax Statements) from employers.
Forms 1099 (Miscellaneous Income) from banks and other payers.
Any documents that show income, including income from virtual currency transactions. Taxpayers should keep records showing receipts, sales, exchanges or deposits of virtual currency and the fair market value of the virtual currency.
Forms 1095-A (Health Insurance Marketplace Statement). Taxpayers will need this form to reconcile advance payments or to claim the Premium Tax Credit.
The taxpayer’s adjusted gross income (AGI) from their last year’s tax return. People using a tax software product for the first time will need their prior year's AGI to sign their tax return. This is not the case for those using the same tax software they used in the prior year.
Forms usually start arriving by mail or are available online from employers and financial institutions in January. Review them carefully. If any information shown on the provided forms is inaccurate or incomplete, the taxpayer should contact the payer as soon as possible to obtain a corrected form.
Tax Tip 2020-18 #IRSTaxTip