Tax preparers filing season prep: A written security plan
6 reasons to file your taxes early

2019 tax return filing checklist, including the documents itemizers need to fill out Schedule A

Checklist_study-in-usa

The individual tax filing season doesn't officially open until Jan. 27, but you're ready to file your taxes.

Or are you?

Tax filing, whether you do it yourself via tax software that you buy, use online or access via Free File or hand off the annual task to a tax pro, requires its own specific preparation.

You've got to have all your tax-related documentation before you can start filling out that Form 1040.

Here's a checklist of forms and documents you'll need to complete your taxes, as well as a look at tax situations you need to consider before filing.

Yes, it's long. But going into your tax filing properly prepared will pay off, both in making sure you get all the tax breaks you're due and by ensuring that you don't make a 1040 mistake that could cost you. 

Start with last year: Your 2018 return you filed last year was the first one under the new Tax Cuts and Jobs Act (TCJA).

Yes, a couple of tax things have changed and yes, the Internal Revenue Service has (or will) tweaked the forms. But that last 1040 and any of its six new schedules you used are a great preview of what you're likely to see this filing season.

You'll also want to dig out that copy of last year's state tax filing if you live in a state that collects an income tax.

These old forms will be particularly helpful if your personal and financial life didn't change much in 2019 from 2018. They'll give you a good idea of what to expect this time round, especially what forms you'll need to do your taxes.

Plus, these documents will have some data — for example, Social Security numbers (yours, your spouse's and any dependents' identification digits) and bank account info if you want your refund directly deposited — that you'll need again this year.

Gather perennial filing documents: The world, tax and otherwise, largely has gone digital. That should help you in the gathering of the tax and financial documents that you'll need to fill out your taxes.

Most third-party tax reporters — these are the folks that let you and the IRS know how much money you made at your job, either full-time or as a freelancer, and how much unearned income you got from investments — must get you this relevant income info by Jan. 31.

Some documents, however, come sooner, especially if you've opted to receive this data electronically.

So instead of or in addition to dogging your mail carrier, check your email inbox or go directly to those accounts online for this data. Then download it a special tax filing folder.

Among the documents you of particular tax-filing note are:

  • W-2 forms reporting your wages and W-2G for gambling winnings if you had a really good time in Las Vegas.


    W-2 segment

  • Various 1099s with sundry income amounts. These include 1099-R for retirement distributions; 1099-INT for interest earned; 1099-DIV for investment dividends; 1099-B for brokerage sales; 1099-G for state tax refunds or other government payments; and 1099-MISC for independent contractor and other types of, as the alphabetic extension indicates, miscellaneous income.
  • 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, loan points and, in some cases, payments made toward private mortgage insurance (PMI) real estate taxes. Note that your PMI itemized deduction was resurrected by the federal spending/tax extenders bill signed into in law last December.

Don't forget more specialized filing material: Every filer's tax situation is unique. That's why you could need tax info in addition to the usual forms that applies to your particular financial circumstances and tax-filing needs.

Considerations here include:

  • Records of estimated tax payments you made for both your federal and state taxes.
  • The amount of tips or other gratuities you received as part of your job. You should have been keeping records of these amounts, especially if you've had to report them each month (as noted in the ol' blog's tax moves column there to the right) to your employer.
  • Any unemployment benefits you received. Among the government payments detailed on the aforementioned Form 1099-G are these payments you received. Yes, that's considered taxable income (sorry) and it has to be included on your 1040.
  • Did you move for a job last year? Sorry, you probably aren't going to be able to count on Uncle Sam to help cover your relocation costs. This above-the-line deduction is still around, but tax reform made the tax break available only to members of the Armed Forces.
  • Distributions from retirement accounts, depending on the type of plan you have, could be taxable. Double check income statements for your workplace retirement and/or IRA withdrawals, as well as your Social Security benefits if you're now getting those payments.

    Couple retirees on beach

  • If you're still contributing to your retirement plan, is any of it deductible? Have your statement of these amounts to help you decide. Don't forget about plans you've set up if you're self-employed, whether as your full-time work or as side hustles. These contributions also can be used to reduce your tax bill, so have those statements handy, too.
  • Did you and your spouse separate or get divorced last year? Then a TCJA change to alimony could come into play this filing season. For divorces and separation agreements finalized after 2018 (that's tax-speak for "in tax-year 2019"), alimony payments are not deductible for the payer or counted as taxable income to the recipient. However, if your divorce was finalized pre-2019, you're grandfathered into the old system: alimony is still deductible, again as an above-the-line deduction, to the payer and still counts as income to the ex-spouse getting the payments. So be sure you have the paperwork showing the year of your marital split and, as long as they haven't made any modifications to that prior dissolution agreement, the amount paid/received for tax deduction/payment purposes.

Getting to know the tax you: OK, you have the paperwork, statements and official tax forms or IRS-approved substitutes.

Don't, however, start working on your taxes just yet.

You also need to take a look at your life last year and answer a few questions that could have tax implications. They include:

Which deduction method do you plan to use, claiming the standard amount for your filing status or itemizing? You're not locked into the deduction choice you made last year. You can change it each year, depending on your most recent financial and tax circumstances.

Do you have any unresolved state or IRS tax issues?

Did you get married or divorced last year? This will affect, among other things, your filing status.

Are you supporting anyone not living with you?

Are you providing the majority of financial support for someone who is living with you?

Did you have a child last year? Was that new family addition adopted or the adoption process begun last year? Again, among many other child-related tax matters, this could affect your filing status.

Did you pay for a dependent child's (or another dependent's) care so you could go to work?

Did you receive any assistance from your employer to pay for education expenses, child care costs or adoption expenses?

Did you or any member of your household pay any college costs?

college students walking a hallway

Did you hire household help?

Did you make any major improvements to your home?

Did you sell, refinance or face any foreclosure transactions on your personal residence?

Do you own a second residence or any other real estate? If so, did you rent it out last year? The length of those rental periods could affect your tax bill.

How old are you? And how hard is it for you to read this? Your answers could affect the amount of standard deduction you can claim or even the form you file.

Did you retire? If you're collecting a private pension payout, you should get a Form 1099-R cited earlier. If you're also getting Social Security benefits, be on the lookout for your 1099-SSA. Also remember that some of your government retirement money could be taxable.

Were you a resident of, or did you have income in, more than one state during the year?

Did you have money in a foreign account?

Did you make any large purchases, such as a vehicle?

Did you have any nonresidential debt that was canceled?

Did you serve in the military? If so, did you receive combat pay?

Did you have health care coverage? Did you buy your medical insurance through the marketplace, either the federal one or your state's marketplace?

I didn't mean to pry, but the tax fact is that that there's really never too much information to take into account when it comes to filling out your annual return. Or planning for next year's taxes, but that's another post.

Some new heath care considerations: Now about your health care coverage….

Technically, the TCJA left in place the Affordable Care Act (ACA) requirement that we must have minimally acceptable health insurance, either through our employers, federal or state exchanges or by buying it yourself.

However, the TCJA took the teeth out of that mandate. It eliminated the ACA's shared responsibility penalty that had been assessed when folks opted not to buy acceptable coverage for themselves and, if applicable, their families.

So you no longer have to worry about owing Uncle Sam more if you didn't have health insurance. You also don't have to mess with checking the box on your return reporting your coverage.

Note, however, that this is only on the federal level. Some states still penalize their residents who do not have adequate health insurance.

And even though the penalty is gone, still be on the lookout for the a Form 1095-B or Form 1095-C, the statements issued by health care insurance issuers or companies (B for smaller businesses, C for larger ones), to confirm that you had medical insurance through your workplace. Keep these for your records.

As for folks who decided to keep or buy a so-called Obamacare medical policy last year through the federal or a state marketplace, the ACA and tax law remains the same for 2019 tax year purposes.

1095-A

That means you'll need to make sure you get your Form 1095-A, officially titled the Health Insurance Marketplace Statement. This form has information you'll need if you're eligible for the premium tax credit, also known as the federal subsidy.

That tax break still is in effect and it can help you pay for the ACA coverage that you got through the marketplace or reconcile any advance subsidy payments you received.

Schedule A specific information: Now for folks who answered "itemizing" to the deduction method question. This choice could have a major impact on the filing documents you need.

The TCJA almost doubled the standard deduction amounts, so more taxpayers are expected to use this easier-to-claim deduction method this (and future) filing seasons.

But if you do find that itemizing still works better for you (and some of us still do), take note of the new law's Schedule A changes and what you now need (or won't need) to complete it.

Schedule A 2018 tax year version
Note, as of this item's posting on Jan. 8, the IRS hadn't updated the 2019 Schedule A (as you'll discover if you click the form link below) to reflect the extenders law change enacted on Dec. 22, 2019. So for now I'm using the 2018 form pictured above.

Here's a breakdown, using the new Schedule A as a guide, of what's still deductible and what you need to claim the expenses.

Medical
These expenses survived the first major tax reform in more than 30 years. And the TCJA enhanced them a bit. Under the ACA, the threshold for deductions was supposed to go to 10 percent of adjusted gross income, but it was held at the prior-law 7.5 percent of AGI level for all filers, regardless of age. The extenders measure approved last month continued that percentage through the 2020 tax year. So on your 2019 (and 2020) return, you still can claim allowable doctor, dentist and a variety of health care related costs that are more than 7.5 percent of your AGI.

Regardless of the tax year or deductible threshold percentage, you'll still need records of your IRS-allowable medical expenditures. You don't have to submit those documents, but you'll want then if the IRS questions your claims. This includes prescriptions, 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.

State and local taxes (SALT)
As homeowners with expensive residences already know, this part of the "Taxes You Paid" section of Schedule A didn't fare as well under TCJA. You still can claim the taxes you paid to your state and local tax collectors, including income or sales taxes — remember, can't deduct both; you must choose sales or income taxes to claim — along with real estate and personal property taxes, but there's now a limit. Only a maximum of $10,000 in state and local taxes, known by the acronym SALT, can be counted here.

IRS regulations issued last year also blocked state charitable workarounds to this limit. And four states that sued on the grounds that the SALT limitation is unconstitutional lost in federal court. They are appealing, (as are those still fighting the workaround battle), but the legal system won't work quickly enough to affect your 2019 return filing.

For most folks not living in high-tax states or expensive neighborhoods, the 10-grand SALT deduction cap shouldn't be a problem. And if you're not near the limit and are claiming sales taxes, don't forget about adding in any state or local sales tax that was tacked on to a major purchase, such as a car, boat or airplane.

Your state and local officials should provide you with receipts or similar documents detailing the taxes you can claim. If you want to add up your sales taxes yourself rather than use the optional state sales tax table amounts the IRS provides in the Schedule A instructions, you'll need all those receipts, too.

Interest
This mainly applies to homeowners, who still can claim the deductible interest on their mortgage. This will be reported on the previously mentioned Form 1098 or an IRS acceptable substitute document.

Note, however, that the limit on the amount of home loan on which you can claim this deduction was reduced under the new tax law. Instead of interest on home indebtedness up to $1 million, you now can deduct only the interest on home loan amounts up to $750,000. Don't panic, though, if you have an older, larger home mortgage. If you got the loan on or before Dec. 15, 2017, your itemized mortgage interest claim is grandfathered in at the prior $1 million level.

One area, however, where more folks might take a deduction hit is with interest on home equity loans or home equity lines of credit (HELOC). These used to be fully deductible. Under TCJA, however, no matter when you got such a home-secured debt, the interest cannot be claimed if the proceeds were used for something else, say to pay your children's college tuition. This loan interest now is deductible only when the loan or HELOC proceeds are used to buy, build or improve the property used to secure the loan.

And thanks to the late-2019 Congressional action on extenders, the option to claim any private mortgage insurance (PMI) premiums is still available. It counts for tax purposes as mortgage interest and should be detailed on your home loan's 1098 statement.

Charitable gifts
This itemized deduction is still on Schedule A and you can even give more that before if you're able because the deduction limit for gifts to public charities is increased from 50 percent to 60 percent of AGI. But you still need to follow the other rules, like getting contemporaneous substantiation — a receipt — for any contribution of $250 or more. In fact, get receipts from all the nonprofits to which you give regardless of how large or small your donation.

And since donation deductions still must be claimed as an itemized expenses, many folks are looking at other tax-related philanthropic strategies.

Casualty and theft losses
This section is still on Schedule A, but now also is more restricted. You can only claim losses related to a federally declared disaster. In addition to the documentation of the losses and expenses not paid by insurance toward recovery, you'll also have to include the Federal Emergency Management Agency (FEMA) number and the location of property against which the tax claim is being made.

Other itemized deductions 
This section for reporting specific itemized deductions gets a lot of attention because it's where you enter your gambling losses. This includes, among other things, the cost of losing bingo, lottery and raffle tickets, horse and dog racing slips and the money you dropped at the poker table or roulette wheel at your favorite casino. Obviously, you'll need to keep good track of these expenditures. Remember, though, that your losses can only offset the amount of winnings you got during the tax year, some of which were on the W-2G form mentioned earlier. You can't claim losses to produce a loss on your taxes.

And note that this section does not include those myriad expenses that used to be classified on pre-TCJA Schedule A as miscellaneous expenses. Those write-offs, generally for unreimbursed work-related expenses (either spent on the job you have or in looking for a new one), are gone.

Ready, set, wait to file: Whew! That's a lot of pre-filing stuff to consider regardless of whether you use Schedule A or take the easier standard deduction route.

It's also a lot of documentation to gather or track down, regardless of whether you plan to file your taxes yourself or deliver the material to your tax preparer.

But even if you think you have everything, think again.

Whoa. Hold on. Brett Eldredge via Giphyvia Giphy

With the official start of tax filing season 2020 a couple of weeks away (you did mark Jan. 27 on your calendar, right?), you still have time to make sure your pre-filing preparation is thorough.

Don't slack off here. Getting the documents and data you need beforehand will make the actual form filing easier.

And if you don't have the documents you need by Jan. 27, then take a breath. Remember, statements issuers have a few more days (until Jan. 31) to get the statements to you.

It might be hard, especially if you're expecting a refund, but just be patient and wait until you have all the information you need to file a complete and accurate return. You don't want to pay the price of filing an incomplete or inaccurate return too soon.

Did I overlook any tax documents or filing situations to consider before you sit down, whether by yourself or with your tax pro, to fill out your 1040? If so, please let me know in the comments section below.

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