Your Tax Preparation Checklist

By Net Worth Advisory Group

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Though most of us would rather not spend our time thinking about taxes, it’s time to focus on this inevitable part of life. The good news? The more prepared you are, the quicker you can finish and get back to doing what you enjoy! Whether you file your tax return using tax software or work directly with a professional, a tax prep checklist can keep you organized and help reduce the stress of this season. 

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To avoid the frustration of realizing you’re missing a crucial document, our team at Net Worth Advisory Group has created the following checklist to help you prepare and stay on track.

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Organize Your Personal & Income Information

You’ve most likely already started receiving various tax documents virtually or in the mail, so instead of letting them sit in a pile on your counter, create an organized system for the following:

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Income Information

• Form W-2: These are issued by employers and show your wages and tax withholdings. They are supposed to be mailed by January 31.
• Form 1099-MISC: These report income you have received as an independent contractor or freelancer. You should receive one from each person or company that pays you.
• Form 1099-INT: This form will show any interest you have earned.
• Form 1099-R: This form reports income received from annuities, IRAs, or pensions.
• Form 1099-DIV: Any dividend income you earn is reported on this form.
• Form 1099-B or 1099-S: You will receive these if you have any income from the sale of property or stock.
• Form 1098: You will get this from your mortgage company reporting the interest that you paid.
• Form 1098-T: This reports payments of qualified tuition and expenses.
• Form 1095-A or 1095-C: These forms report your healthcare coverage for the year and your premium tax credit, if applicable.
• Schedule K-1 (Form 1065, Form 1120S, or Form 1041): This reports income for a partner, a shareholder, or an income beneficiary of an estate or trust. The Schedule K-1 normal deadline can be as late as April 15th.

Income-Reduction Documents

• Form 1098-E for student loan interest paid, or loan statements for student loans received
• Form 1098-T for tuition paid or receipts from the institution you or your dependents attend
• Receipts for any qualifying energy-efficient home improvements
• Records of IRA contributions made during the year
• SEP, SIMPLE, and other self-employed pension plan information
• Records of medical savings account (MSA) contributions
• Moving expense records
• Self-employed health insurance payment records
• Alimony you paid if your divorce was finalized before December 31, 2018
• Records for any qualified charitable distributions (QCDs) made to a charity from your IRA

Personal Information

If you want your tax-filing experience to be painless, you’ll also want to make sure you have all of your and your dependents’ personal information available, such as: 

• Social Security numbers and birth dates
• Copies of last year’s tax return (helpful, but not required)
• Bank account number and routing number, if you wish to have your refund deposited directly into your account

Gather Documents for Itemization

If you’re planning to itemize your deductions this year, you’ll need records to include your totals and provide proof. 

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Deductions and Credits

• Childcare costs: provider’s name, address, tax ID, and the amount paid
• Education costs: Form 1098-T, education expenses
• Adoption costs: SSN of the child; records of legal, medical, and transportation costs
• Form 1098: Mortgage interest, private mortgage insurance (PMI), and points you paid
• Investment interest expenses
• Charitable donations: cash amounts, donated securities, and official charity receipts
• Medical and dental expenses paid
• Casualty and theft losses: the amount of damage, insurance reimbursements
• Records/amounts of other miscellaneous tax deductions: union dues; unreimbursed employee expenses (uniforms, supplies, seminars, continuing education, publications, travel, etc.)
• Records of home business expenses

Taxes Paid

• State and local income tax
• Real estate tax
• Personal property tax

Updates for the 2023 Tax Year

There are some important changes to keep in mind when filing your 2023 tax return. Depending on your filing status, some taxpayers may receive significantly smaller refunds due to these changes.

• The Child Tax Credit will remain at $2,000 per dependent in 2023 and in 2024.
• The Earned Income Tax Credit moved up to $600 for eligible taxpayers with no children.
• The Child and Dependent Care Credit allows you to claim from 20% to 35% of your care expenses up to a maximum of $3,000 for one person, or $6,000 for two or more people. 

Stay on Top of Tax Changes

Those lists cover the details of what you’ll need in front of you to thoroughly fill out your tax return. But there are also a few things to think about that could impact how you file, such as any changes that have occurred this year. Did you add another child to your family? Did one of your children start college? Did you start taking withdrawals from a retirement account? All these changes need to be reflected on your tax return but won’t show up on prior returns.

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Specifically, you should stay on top of annual changes to retirement plan contribution limits. For the 2024 tax year, you can put up to $7,000 in any type of IRA ($6,500 for the year 2023). If you are over age 50, that amount goes up by $1,000 with the catch-up contribution. 2024 annual contribution limits for 401(k)s, 403(b)s, and most 457 plans are $23,000. If you are 50 or older, your yearly contribution limit goes up to $30,500. And if you are eligible to contribute to an HSA, you can save $4,150 if you have single medical coverage and $8,300 if you are covered under a qualifying family plan in the year 2024 (up from $3,850 and $7,750 for the 2023 tax year, respectively). If you are 55 or older, those limits go up another $1,000. Keep in mind that for IRAs and HSAs, you have until April 15th, 2024, to contribute for the 2023 tax year. 

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A knowledgeable financial professional can help you understand any tax law changes and how they affect you.

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Our Team Is Here to Help

Even though your current tax situation might be overwhelming, it’s crucial to file your 2023 tax return accurately to keep you from overpaying. Additionally, it’s necessary to take a step back and consider the bigger picture of taxes and utilize all the available tools to reduce your tax liability effectively. Taxes can be complex, so working with a professional can be beneficial to discover all your opportunities. They can provide guidance on tax planning while aligning with your overall financial goals. 

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Are you interested in proactive tax planning? Consider reaching out to us at Net Worth Advisory Group for assistance. You can schedule an appointment by calling us at 801-566-6639 or schedule a complimentary, no-obligation consultation to see if we are a good fit to help you pursue your goals.

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To learn more, visit our website.

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About Net Worth Advisory Group

Founded in 2003, Net Worth Advisory Group is an independent, fee-only, CERTIFIED FINANCIAL PLANNER™ and investment advisory firm located in Salt Lake City, Utah. We specialize in helping people transition from the workplace into retirement and ensuring that those who are already retired will not outlive their nest egg. Our top priority is to have clients experience a greater sense of ease with diligent, personalized wealth care and the implementation of customized financial plans and ongoing personalized asset management. We equip all clients with a comprehensive financial plan, meeting every six months to update as needed and review investment performance. Our team is passionate about providing comprehensive financial planning with the fee-only model, and we love feeling like we’re making a difference in our clients’ financial lives.

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As a NAPFA-registered fee-only advisory firm, our recommendations are untainted by a hidden agenda to sell financial products paying large commissions. Unlike our competitors at brokerage firms, insurance companies, and banks, we are compensated solely by our clients, so we are financially motivated to provide objective advice that is always in our clients’ best interests. Anyone can call himself or herself a financial planner, but only an advisor with the CERTIFIED FINANCIAL PLANNER™ (CFP®) designation has met the education, examination, experience, and ethical requirements mandated by the CFP® board. According to the CFP Board, there are 97,000+ CFP® professionals in 2023, representing about 1 in 3 financial advisors in the U.S. Net Worth advisors are also members of NAPFA, which only has about 4,600 advisors, and are either CFP® professionals or CFP® professionals in training.

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Net Worth Advisory Group’s mission is to significantly improve the lives of our clients by delivering exemplary financial planning and wealth management advice that enables them to live the lives they have imagined.