Important Documents To Gather for Tax Preparation – Page 1

Regular readers know that I’m a tax nerd. While I love everything about financial planning, numbers and spreadsheets, I have a special place in my heart for taxes.

Why?  Maybe I just like numbers.  Maybe I’m fascinated by the amount of organization tax planning requires or the way that everything fits like a puzzle in a well-executed tax return. I like tax planning so much that I’ve spent my last decade as a tax attorney. Even before I practiced law, I prepared taxes for HR Block.

So I’m probably one of the few people in America who is actually excited about the fact that the 2017 tax season opened up on January 23rd. By now most of your tax documents should have arrived (the majority are due by January 31st). That means you should have the information you need to file, not in April but right now. So let’s get organized!

This week, we’ll start with an introduction to the most common documents you will encounter as you get ready to file. To make your tax prep easier, I’m going to break my analysis into the essential parts of your tax return: Income, Adjusted Gross Income (AGI), Tax and Credits, Other Taxes, and Payments. I’ll identify each form that you may receive and link it to the corresponding line on the Form 1040 individual income tax return where you input the info.

While I would love to go through the 79 lines of your return, that’s beyond the scope of this post. I want to focus on the forms that come up most often for my generation X and Y clients.  And even with just those most common forms, I’ll have to split this into two posts. This week I’ll tackle the front page of your return — covering income and AGI. Next week I’ll go over page 2.



W-2 – Line 7: You receive this form from your employer(s). It lets you know how much you earned from that company for the entire year. Pay special attention to:

  • Box 1 – Wages, tips, other compensation
  • Box 2 – Federal income tax withheld
  • Box 12 – This box summarizes employee benefits contributions — things like retirement plans, the cost of employer sponsored health coverage, the taxable cost of group-term life insurance, etc.)
  • And boxes 16 and 17 – state wages, tips, etc. and state income tax withheld

1099-Misc – line 12 or 21:  If you’re self-employed, you will receive this form from each company that paid you more than $600. You can tell the type of income paid to you by the box that’s used the form. Most people will see payments credited in box 7, nonemployee compensation.  If you’re a sole-proprietor or a single member LLC, you will add together all of these amounts to calculate line 1 of your Schedule C.  You may also find that you’ve received “other income.” That type of income, if not engaged in for profit, is not subject to self-employment tax and goes on line 21.

1099- INT – Line 8: You’ll likely encounter this form if you have your emergency fund deposited in a savings or money market account. You’ll get it if you’ve earned more than $10 interest from your account this year — even if you kept that interest in your account.

1099-B – Line 13: If you’ve sold some type of investment (like stocks, bonds, mutual funds or ETFs), you will get this form from your broker or fund company. The boxes of particular importance here are 1b (date acquired), 1c (date sold), 1d (proceeds), and 1e (cost basis). Also remember that you can only deduct $3,000 a year in losses. Everything else needs to be carried forward.

1099-R – Lines 15 and 16: You receive this form when you’ve taken some sort of pension or retirement distribution. You know whether this amount goes on line 15 or 16 by looking at whether the box on line 7 of the form is checked. If it is, it was an IRA distribution and goes on line 15. The taxable amount — the different between (a) and (b) on the return —  depends on the type of distribution and vehicle that the money came from.  The taxable amount should show up on line 2a. If it’s unknown or undetermined, you’ll have to do more analysis. Also remember you may incur a 10% penalty on any early distributions. We’ll talk more about that next week.

Schedule K-1 – Line 17:  For those of you who receive income from an estate, royalties, partnerships, S corporations or trust, you’ll get a K-1. This form usually arrives later in the season and sometimes so late that you’ll need to file an extension. The K-1 is a pretty detailed document, with special limitations about what kind of income flows through.


Adjusted Gross income

Form 5498 –SA – Line 25: If you take advantage of an HSA, first good for you and second, you’ll get this form.  HSAs are pretty awesome.  You get a tax deduction for your contributions, your earnings grow tax free and your distributions are tax-free as long as they are used on medical expenses. The form details contributions made in 2016 (line 2) and, if applicable, contributions made in 2017 (line 3).

Form 5498 – Line 28 and 32: This form details how much you’ve contributed to a Traditional IRA (box 1), Roth IRA (box 10), Simple IRA (box 9) and other retirement arrangements available to self-employed people. It also notifies you of any Rollover Contributions (box 2) and Roth conversions (box 3).  These are informational forms that give you the amounts needed to take a deduction for your self-employed plans or your traditional IRA.

Form 1098-E  – Line 33: Almost all of us have student loans, so look out for this form. Your lender sends it to you if you’ve paid interest to them. Technically, they don’t have to send the form unless you’ve paid more than $600 in interest, but I’ve seen lenders send the form regardless. I got one for $500 this year. You’ll need this form to deduct interest on your student loan.


Whew, I know that’s a lot of forms. And I apologize if I didn’t get to one that is of particular interest to you. If you have questions about these forms or something I missed, email, tweet or message me.  See you n