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Tax filing checklist to help complete your 2017 tax return

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The 2018 tax filing season officially starts today.

Many folks have already filed, by using Free File (which opened on Jan. 12), going with software on their own or turning over their tax material to paid preparers. The Internal Revenue Service will now process all those 1040s that were completed earlier this month and were on hold.

If you, however, haven't gotten around to filling out your taxes yet, here's a checklist of what you'll need to accurately and easily complete your return.

You might not need some of the stuff noted in this latest checklist. Feel free to skip over those segments. But there's plenty of more general tax-filing issues and items that affect most of us, too.

Start with last year: Every new tax filing season, it's a good idea at the start with the past, specifically your prior year's return. In this case, it's your 2016 return you filed around this time last year.

This includes your prior year's state tax filing if you live in a state that collects tax.

If your personal and financial life didn't change much in 2017, your previous return will give you a good idea of what to expect this time round.

Did you get investment income and still have those same assets? Your reporting of that interest, dividends and capital gains on your previous tax return is a reminder of the info you'll likely need to report again on this year's filing.

And if you are filing your return electronically, you must sign and validate your electronic tax return by entering your prior-year adjusted gross income (AGI) or your prior-year Self-Select PIN. To use your AGI as your identifier, you'll need that previous return.

Gather all tax ID numbers: Speaking of tax identification numbers, most of us use our Social Security numbers to file our tax returns.

You'll also need the Social Security numbers for your spouse if you file a joint return, as well as those for anyone you can claim as a dependent.

Some taxpayers, however, must file using special Individual Taxpayer Identification Numbers (ITINs). The IRS issues ITINs to individuals who are required to have a U.S. taxpayer identification number, but who do not have, and are not eligible to obtain, a Social Security number from the Social Security Administration.

It can take up to 11 weeks to process a complete and accurate ITIN renewal application. Get started online by going to the IRS pages on renewing or applying for an ITIN.

Get your income verification docs: Now for those other key numbers, the ones detailing the earnings on which you owe taxes. It is, after all, called an income tax and to keep the IRS off your back, you need to report it completely and accurately.

That's what all those statements that have been showing up in your email and snail mail boxes are for. If you're still missing a few, don't freak out. The issuers have a couple more days, until Jan. 31 to be precise, to get the tax data to you.

Here are some of the more popular forms you should get:

  • W-2 forms from employers who paid you a wage or salary. It also will show how much in taxes were withheld and whether you contributed to a workplace retirement plan, like a 401(k), which could affect the deductibility of any traditional IRA contributions you made.
  • W-2G for gambling winnings if you had a really good time at your local casino.
  • 1099 form come in many versions. The 1099-MISC is issued to report earnings of $600 or more that you received.
    1099-INT, 1099-DIV and 1099-B forms detail investment income from, respectively, interest earned, dividends paid and brokerage transactions. 1099-G reports any unemployment benefits, state tax refunds or other government payments you got. If you drove for Uber, used Airbnb or HomeAway to rent your home or got other payments through a third-party like PayPal, you'll likely get a 1099-K detailing those funds. Retirement account distributions are reported on a 1099-R.

Other information you need: In addition to the income forms, you need to provide some basic information. These questions/suggestions cover the filing situations many filers encounter.

  • Records of estimated tax payments you made for both your federal and state taxes.
  • Do you get tips as part of your job? Have your records of those payments handy.
  • Were you unemployed for a bit? The W-2G you (and the IRS) got is income that has to be included on your 1040.
  • The same is true for gambling and prize winnings.
  • So is money you made from a hobby. It's miscellaneous income that must go on your Form 1040.
  • If you moved to take a better job, your relocation expenses could be taken as an above-the-line deduction, meaning you don't have to itemize to get the tax break.
  • If you're getting alimony, that's taxable income. If you're paying alimony, it's also an adjustment to your income. Make sure you have the correct amounts in either case.
  • Did you or any member of your household pay any college costs? You should get Form 1098-T, which will help students (or their parents) calculate education tax credit eligibility. A 1098-E shows potentially deductible student loan interest payment amounts, which is yet another above-the-line deductions.
  • If you got distributions from retirement accounts, depending on the type of plan it could be taxable. Double check retiree income statements for your IRAs and Social Security benefits.
  • If you're still contributing to your retirement plan, is any of it deductible? Have your statement of these amounts to help you decide.

Affordable Care Act forms: Despite Republican efforts, the Affordable Care Act, usually referred to as Obamacare, is still in effect. So are, for now, health care law's tax ramifications, which the IRS says it will continue to enforce.

Obamacare-Affordable-Care-Act-Compliance-1095-Form

That means you should be on the lookout for Obamacare-related tax forms.

  • Form 1095-A is officially titled the Health Insurance Marketplace Statement. As the name indicates, it is sent by the exchanges through which individuals purchased their medical coverage.
  • Form 1095-B is issued by health care insurance issuers or some smaller companies that provide coverage for employees, confirms that you had at your workplace acceptable minimal health insurance coverage. It also shows how long you were covered and which family members also were on your policy.
  • Form 1095-C is the same as the 1095-B, but it is issued by large employers.

The B and C 1095s generally will mean you just have to check a box on Form 1040 (line 61), 1040A (line 38) or 1040EZ (line 11) to let the IRS know that you had health care coverage and therefore don't owe a tax penalty.

The A version of 1095 is key if you're eligible for the premium tax credit, also known as the federal subsidy, to help you pay for your ACA-mandated coverage that you got through the marketplace.

These 1095 forms usually are due to you by Jan. 31. This year, however, the IRS is giving some issuers more time to deliver them. This means some 1095-B or 1095-C forms won't be due until March 2.

Because of the extension, some filers won't get their ACA-related forms by the time they are ready to file their 2017 returns. While information on the forms should help in completing your taxes, the forms are not required to file. When you're ready, go ahead and prepare and file your return using other information about your health coverage.

Schedule A specifics: Most filers claim the standard deduction amount. But if you're part of the minority that itemizes deductions, you'll need more records and receipts to complete Schedule A.

Some of the more common itemized deductions and data needed to claim them are listed below.

  • Homeowners have that 1098 handy for the deductible mortgage interest amount you paid. It also might show any property tax payments that you also can itemize, as well as points that can be written off here. Interest paid on a home equity loan or home equity line of credit also might be deductible.

    NOTE: Deducting your mortgage's private mortgage interest (PMI) as interest is no longer an option. That itemized tax break was one of several that expired at the end of 2016 and wasn't renewed for the 2017 tax year. It's possible it could be resurrected by Congress this year as part of another tax extenders package, but it won't help with the 2017 return you're working on now.

 

  • Records of your medical and dental expenses. This includes drugs, doctor office visit payments, dental care costs, hospital bills, medical insurance premiums as long as they aren't paid at work via pretax dollars, long-term care insurance premiums and the mileage to and from physicians' offices. Even though the new Tax Cuts and Jobs Act (TCJA) provisions cut the threshold to deduct medical costs for the 2017 and 2018 tax years from 10 percent to the prior 7.5 percent of your AGI, every medical expense helps maximize this deduction.

  • Other taxes you paid are deductible. This includes state and local income or sales taxes, real estate taxes and personal property taxes. When it comes to sales tax write-offs, major purchases such as a car can be added to the standard state and local tax amount for your state.

    NOTE: There has been much confusion about whether 2018 real estate taxes prepaid by Dec. 31, 2017, are deductible on 2017 returns. Many folks paid these taxes early in order to maximize the property tax write-off before it is limited by TCJA changes. The IRS issued some guidance here late last December, but several members of Congress (and tax professionals) are questioning the IRS' position. If you don't want to wait on more definitive info, you might need to amend your return if/when it is issued.

 

  • Your philanthropy pays off here. Gather us those receipts of charitable contributions, be they cash or goods.

  • If you had a casualty or theft losses last year or sustained damages from a major disaster, find the data on the costs associated with your recovery efforts. It could be deductible.

  • Track down those work-related costs, both for unreimbursed employee expenses or for money spent searching for that new job you moved to take. These expenses count as miscellaneous deductions.

  • Don't forget investment expenses. It also is a deductible miscellaneous expense that help you clear this 2 percent of AGI threshold.

  • Chances are you lost as well won when you placed your bets. Records of your gambling losses can be used to offset any taxable gambling proceeds.

A few more questions: In addition to collecting all your filing material, take the time to answer a few questions that could have tax implications. They include:

Do you have any unresolved state or federal tax issues? Offsets to pay overdue tax and other government bills could cut into or eliminate your refund.

Did you get married or divorced last year? As noted in the alimony income/deduction mention earlier, it will affect your fling status.

Are you supporting anyone not living with you? Aging parents and other relatives might qualify as tax dependents.

Did you adopt a child or begin the adoption process last year? There are tax breaks for adding to your family this way.

Did you pay for child or another dependent's care so you could go to work? The child and dependent care credit could provide some tax savings.

Did you hire household help? Yep, talking here about the nanny tax.

Did you receive any assistance from your employer to pay for education expenses, child care costs or adoption expenses? If so, it will affect the amount of tax credits you can claim on your own.

Did you make any major improvements to your home? They might not be immediately deductible, but could help lower any possible tax bill when you sell.

Did you have any nonresidential debt that was canceled? If you got a reduce balance to pay off on your credit card, you'll probably get a 1099-C showing that you owe tax on that forgiven amount.

Did you sell, refinance or face any foreclosure transactions on your personal residence? Any forgiven debt in this case now counts as income. The tax law that allowed for exclusion of excused mortgage debt expired at the end of 2016, along with the PMI itemized deduction discussed earlier.

Do you own a second residence or any other real estate? If so, did you rent it out last year? The length of time you were a landlord will determine what kind of tax breaks you can claim.

Did you have money in a foreign account? Don't try to hide it. The penalties are severe.

Did you make any large purchases, such as a vehicle? You can add the amount of sales tax to the IRS-provided general sales tax tables used by filers who claim this instead of state and local income taxes when itemizing.

Did you serve in the military? If so, did you receive combat pay? Armed services taxpayers have some special tax matters to examine and, in some cases, some added tax considerations from Uncle Sam. 

Were you a resident of, or did you have income in, more than one state during the year? This will likely complicate your tax filing duties.

Account numbers key to refund receipt: If you want your refund directly deposited, make sure you have the correct account numbers and financial institution routing number.

The account number shouldn't be a problem, but sometimes banks use different routing numbers for tax refund deposits. It's not always the same as shown on your checks, so double check with your bank for the correct digit string.

Forget about the new tax laws, for now: The new tax laws that took effect on Jan. 1 will affect a few 2017 tax return situations, most notably regarding property tax payments and itemized medical deductions.

But for the most part, the new TCJA changes to the tax code will show up when we file our 2018 tax returns in 2019. So we definitely need to take note of the differences we'll see on our returns next year.

For now, though, don't add to filing confusion by worrying about 2018 taxes. Focus instead on getting your 2017 returns done now. This checklist should help.

You also might find these items of interest:

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