What do I need to do my taxes?

One of the most asked questions of our firm, McGehee Davis & Associates, all year but specially during tax season is WHAT DO YOU NEED FROM ME TO DO MY TAXES? The answer to this question has two parts, Business & Personal. In this month’s newsletter, we will look at the items that are needed, should have, keep on file somewhere, and don’t need at all for both business you own and your personal items.

Needed Items for both –

  1. Any tax form that has a number in the title. A good example of this is 1099-int, W2, 1098T, etc. All these types of forms have had a copy of it sent to the IRS under your social security or EIN. These are IMPORTANT!

Needed items for business (this includes rental businesses)

  1. Profit & Loss Statement – This is a list of all income received by your business and all expenses paid by your business. This does not have to be a formal report but should be verifiable by bank statements.
    • If you are having an accountant like MDA Taxes preparing these for you, we will need copies of all accounts associated with the business. This could include bank accounts, credit card accounts, cash pay accounts, or vendor accounts.
    • Cash receipts – if you paid cash for any expenses, you must have a receipt that has the company that was paid, date paid, amount & for what. If you have as smart phone, there are apps that allow you to take pictures of these types of receipts, so you don’t have to keep the physical copy of these receipts.
  2. Balance Sheet Statement – This is a list of all accounts owned or used by the business with the balance in each account as of 12/31/2022. This does not have to be a formal report but should be verifiable by statements.
    • These accounts can also include any assets owned by the business, any liabilities that the business need to pay, inventory (if applicate), and any payments to or from owners or shareholders.
  3. Copy of prior tax year return

Needed items for Personal taxes

  1. Social security & Date of births (or death date) for anyone who is on your taxes.
    • If you are claim as a dependent anyone, the IRS REQUIRES a valid social security number or taxpayer ID number along with the birth date associated with that valid number.
  2. TP number – This is an IRS issued Theft Protection PIN. It is a 6-digit number that the IRS will mail to you. When the IRS determines that your account with them has been compromised or you have requested it, they will issue you this every year. It will be new every year.
  3. A copy of prior year tax return

Optimal items for Personal taxes

  1. A list of Itemized deductions – only about 15% of all taxpayer’s payout enough to itemize their deductions. Here is a list of items and limits and must be GREATER THEN THE STANDARD DEDUCTION!
    • Medical costs – doctors, dentists, prescriptions, over the counter items approved by IRS, long term care, and equipment that have been paid out of pocket by the taxpayer.
      • This is subject to a 7.5% deductible of your AGI. This means that whatever your income is times it by 7.5%, this is the amount that the IRS says is your responsibility (Example – If your AGI is $100,000, the first $7,500 of the combined medical cost is not deductible on your return)
    • Taxes paid to other entities
      • This includes State income tax, some sales tax, and property or personal tax
    • Mortgage interest and points not used in prior years
    • Catastrophic loss
      • This is only allowed if the loss occurred during a declared state/fed emergency
    • Gambling loss
      • This is subject to a maximum of gambling winnings only
    • Charities/Policial donations
      • This must be given to a verifiable non-profit organization by the IRS and if it is over $500, you must have a receipt from the organization.
  2. Bank Account – If you are due a refund for either federal or state, you will receive your funds faster if you include a direct deposit to a checking or savings account.
  3. A plan – If you owe money to federal or state, think about doing an installment agreement with auto payments to them. This will stop for getting penalty for non-payment or late payments. You will still have interest that will be due, but this could be lower than getting a loan for the money. The IRS requests a minimum payment per month, but it is based on the amount you owe.
  4. Open communication with your accountant. This item will allow you to have a better understanding of when your taxes will be done, when they will be e-filed, when they will be accepted by the entity and when you should expect your refund.
  5. Make an appointment to meet with us or your financial advisor for after April 18th. This will allow you to talk with someone about ways to lower your tax liabilities legally. These could include make deposits into retirement accounts, health savings accounts, among other avenues.

New Rules for Tax year 2022

  1. What will get my refund in my hand faster
  2. What is the tax for the average American
  3. What do the Energy & Fuel Credit truly get me
  4. Should I file by April 18, 2023 or extend?
  5. New IRS Agencies, What does this mean
  6. Starting a new business
  7. Student Loan Forgiveness programs
  8. What you need to know if you owe the IRS/State
  9. New employment laws in Colorado
  10. Tax Changes in the Inflation Reduction Act of 2022
  11. Taxation of Cryptocurrency
  12. When do I start thinking about 2023 taxes

One thought on “What do I need to do my taxes?

  1. Doris J Allard says:

    are you sending a packet to me telling me what I need to file my taxes this year? I have not done this myself before this year

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