You're finally ready to sit down and do your taxes. Are you sure?
The only thing worse than filling out your 1040 and all those other forms is finding that you forgot something and have to file an amended return.
A tax-filing checklist will help ensure you have all the information you need to complete your federal income taxes correctly.
Generally, the documents and materials you need stay pretty much the same from tax year to tax year. For 2014 returns, however, there are a couple of new considerations.
Obamacare filing issues: This year, millions of folks are dealing for the first time with the tax implications (including new forms) of the Affordable Care Act (ACA), commonly known as Obamacare.
Folks who have coverage through our workplaces will simply have to check a box on our 1040 (line 61), 1040A (line 38) or 1040EZ (line 11). Others, however, will have to deal with the premium tax credit.
This tax credit, also known as the federals subsidy, was designed to help individuals buying ACA-mandated coverage through the marketplace, that is, a state or the federal exchange, pay for their policies. They either claimed the premium tax credit in advance then, meaning they must reconcile that payment on their 2014 returns, or they can claim the credit when they file.
If you got the advance premium tax credit when you bought your insurance, then you should have in hand by now a 1095-A statement from the exchange where you made the purchase. This new IRS document has information necessary to finish your 2014 taxes.
So dig out that statement or touch base with your exchange to get a (or another) copy.
Beware bitcoin taxes: Then there's bitcoin. This virtual currency has been growing in popularity, which means the Internal Revenue Service was finally forced to deal with it.
In April 2014, the agency issued some guidance on how it views bitcoin for tax purposes. Basically, Uncle Sam will treat bitcoin as property rather than currency. That means in many cases it will be taxed at capital gains tax rates, which are lower than ordinary tax rates if you hold the asset for more than a year.
But, says the IRS, if you receive bitcoin as payment for goods or services, it must be counted as part of your gross income. In these situations, the bitcoin payment essentially is treated just like bartering. That means you count the fair market value of the virtual currency, measured in U.S. dollars, on the date you received it.
Got those records?
If you were paid in bitcoin or any other virtual currency, the payer is required to report it (if it meets the $600 threshold) on a form 1099-MISC or acceptable substitute, using the cryptocurrency's fair market value at the time of payment.
If you didn't get a 1099, you're going to have to recreate the payment's amount as best you can. The IRS says if a virtual currency is listed on an exchange and the exchange rate is established by market supply and demand, the fair market value of the virtual currency is determined by converting the virtual currency into U.S. dollars (or into another real currency which in turn can be converted into U.S. dollars) at the exchange rate, in a reasonable manner that is consistently applied.
This, my friends, is why I'm sticking to old-fashioned cash or its traditional alternatives.
Perennial filing documents: If you don't have to worry about Obamacare or bitcoin documents, then your tax filing checklist will look essentially like it did last year.
This means you need to gather your
- W-2 forms reporting your wages and W-2G for gambling winnings if you had a really good time in Las Vegas,
- various 1099s with sundry income amounts, including 1099-R for retirement; 1099-INT for interest earned; 1099-DIV for investment dividends; 1099-B for brokerage sales; 1099-G for unemployment benefits, state tax refunds or other government payments; and 1099-MISC for independent contractor and other types of, as the extension indicates, miscellaneous income, and
- some 1098s, such as 1098-T that students will need to calculate education tax credit eligibility; 1098-E with potentially deductible student loan interest payment amounts; or the plain old Form 1098 for homeowners with mortgage interest, private mortgage interest, loan points and, in some cases, property taxes paid.
Those are some of the most common forms you should track down before you start working on your taxes. And don't forget about your state taxes, which most folks also have to complete. A lot of this will apply to those returns, too.
More tax filing material you might need can be found in my still relevant 2014 tax filing checklist.
So get to hunting and gathering your material. Having it all on hand will make the final filing task that much easier.
You also might find these items of interest: