Your Tax-Preparation Checklist

By Brett Gottlieb

With everything the past two years have thrown at us, the last thing you probably feel like doing is thinking about taxes. But, like it or not, tax season is here, and the better prepared you are, the sooner you can shake off that stress and spend your time doing what you love instead. And since there’s nothing worse than getting close to finalizing your taxes only to realize you’re missing an important document, we’ve created a tax-preparation checklist for you to follow to help make sure you have all your ducks in a row.

Organize Your Personal & Income Information

You’ll start receiving various tax documents virtually or in the mail soon, so instead of letting them sit in a pile on your counter, create an organized system for the following.

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.
• Notice 1444-C or Letter 6475 for the third round of stimulus payments in 2021 (more on this below).
• Letter 6419 for the advanced child tax credit (ACTC) payments you received (more on this below).

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

Personal Information

If you want your tax-filing experience to be painless, you’ll also want to make sure that 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.

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 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

New Documents for 2021

In 2021, many people received the third round of Economic Impact Payments (EIP3). In addition, the government launched the Advanced Child Tax Credit (ACTC) payment program. Because of these changes, you must have these new documents when filing your 2021 taxes:

• Notice 1444-C (sent following the stimulus payment) or Letter 6475 (issued in January 2022).
• Letter 6419 (issued by the IRS in January 2022)

If you don’t have these documents, you can log in to your IRS.gov account to find them. 

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.

More than personal changes, there may be changes to federal or state tax law that you should be aware of for the future. While the success of the Build Back Better Act is still unsure, the proposed tax changes could have major implications for your financial situation, such as the phasing out of backdoor Roths, new surcharges on high-income earners, and changes to taxes for businesses.^[1]

Specifically, you should consider staying on top of annual changes to retirement plan contribution limits. For the 2021 tax year, you can put up to $6,000 in any type of IRA. If you are over age 50, that amount goes up to $7,000 thanks to the $1,000 catch-up contribution. Annual contribution limits for 401(k)s, 403(b)s, and most 457 plans are $19,500. If you are 50 or older, your yearly contribution limit goes up to $26,000. And if you are eligible to contribute to an HSA, you can save $3,600 if you have single medical coverage and $7,200 if you are covered under a qualifying family plan. 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, 2022, to contribute for the 2021 tax year.^[2]

Seek a qualified tax professional for guidance before making any purchasing decisions.

Look Ahead to the Future

Despite how overwhelming things are right now, it’s important to get your 2021 tax return filed properly and accurately. It’s just as important to look at the bigger picture of taxes in general, and to make sure you are optimizing all the available tools to limit your tax liability.

Taxes can be complicated, to put it lightly, so it helps to work with a professional who understands them if you want to maximize the opportunities available. An experienced financial professional can also help you with tax planning in light of your unique overall goals and financial plan.

If you want to be proactive about tax planning but don’t have a financial professional yet, we at Comprehensive Advisor would love to help you experience confidence in every aspect of your financial plan. Set up an appointment today by emailing us at info@ComprehensiveAdvisor.com or calling (760) 813-2125.

About Our Advisors

Brett Gottlieb is the founder of Comprehensive Advisor and a financial advisor with nearly two decades of industry experience. He graduated from California State University-Chico with two bachelor’s degrees in Business Administration and Economics. Brett is Life Insurance licensed in several states. He is passionate about guiding his clients on retirement income planning, helping each client pursue their specific retirement goals and defending the assets his clients have worked so hard to achieve. Brett is a California native and currently resides in San Elijo Hills with his beautiful wife and three children.

With a combined experience of over three decades in the financial services industry, our advisors hail from some of the largest independent broker/dealers and banking institutions in the country. They have dedicated their professional careers to creating personalized financial solutions for individuals and families who seek successful retirement planning and currently offer investment advisory services through AE Wealth Management, LLC. Our advisors take a common-sense approach to the planning process and work with clients to create a retirement road map to help ensure their assets are protected and they receive the income needed to enjoy their future. Based in Carlsbad, California, they work with clients throughout San Diego County and beyond. Learn more by connecting with Brett on LinkedIn or email them at info@ComprehensiveAdvisor.com.

Comprehensive Advisor, LLC is an independent financial services firm that utilizes a variety of investment and insurance products. Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Comprehensive Advisor are not affiliated companies. C.A. Financial & Insurance Services, CA Ins. Lic. #6000262. This material is intended to provide general information and is believed to be reliable, but accuracy and completeness cannot be guaranteed. The information and opinions contained herein provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by Comprehensive Advisor, LLC. Neither the firm nor its representatives may give tax or legal advice. Individuals should consult with a qualified professional for guidance before making any purchasing decisions. 1237321 – 3/22

^[1] https://taxfoundation.org/build-back-better-plan-reconciliation-bill-tax/

^[2] https://www.irs.gov/newsroom/irs-announces-401k-limit-increases-to-20500#:~:text=The%20contribution%20limit%20for%20employees,to%20%2420%2C500%2C%20up%20from%20%2419%2C500