Important Documents to Gather for Tax Preparation – Page 2

Hey all! Welcome to the second installment highlighting common documents that you’ll gather to file your income tax return. I’m providing these cheat sheets to help make your preparation easier.

Last week, I covered the main sections of page one of your return – Income and Adjusted Gross Income. This week I’ll flip to page two: Tax and Credits, Other Taxes and Payments. Let’s get started.


Tax and Credits

Form 1098 Mortgage Interest Statement – Line 40: For taxpayers who itemize deductions, home-related expenses like mortgage interest and real estate taxes are an important deduction.  If you’ve borrowed to buy a home, you’ll get this form from your lender.  Line 1 is the mortgage interest you paid. Line 5 is the mortgage insurance premiums received by your lender (PMI). If you’re paying your real estate taxes and insurance through your escrow, the amount you paid for the year will also likely appear on the form.  You’ll enter this amount as part of line 40 on your tax form – that’s where you put your total amount of itemized deductions

W-2 (Line 17) – Line 40: I know I mentioned the W-2 last week, but it comes into play on the second page of your return as well.  In the same area that you deduct your real estate taxes, you can deduct state income tax paid, if it’s more than your general sales tax.  The total amount that you paid in will appear on line 17.

Charity Receipts and Letters – Line 40: In addition to being able to take your mortgage interest, real estate taxes and state income tax as itemized deductions, you can also deduct charitable contributions on your Schedule A. If you’ve contributed to charity, you will likely have either a receipt and/or a letter from the charity summarizing how much you paid them. Hold on to this, especially if you’ve contributed more than $250 to one place.

Year-End Childcare Payment Statement – Line 49: Children are expensive, especially if they’re enrolled in daycare. You can qualify for a tax credit that offsets some of your daycare expenses by filing a Form 2441.  But first you’ll need a year-end summary from your daycare provider that details how much you paid them, plus additional information like the provider’s name, address, and Social Security Number or Employer Identification Number. You can avoid having to chase this information at the end of the year by asking your provider to fill out Form W-10 at the beginning of your relationship. That way you will have the information that you need without waiting on a summary. You’ll just have to keep track of how much you have paid for each child.


Other Taxes

1099-R – Line 59: This form is another carryover from last week. If you’ve taken an early distribution from a retirement account, you will have to pay an additional 10% penalty on the amount you withdrew. However, you may qualify for an exception and avoid this penalty. The most common exceptions for younger taxpayers are a distribution for qualified higher education expenses, total or permanent disability or being a qualified first-time homebuyer (for distributions up to $10,000).  You can identify early distributions without an exception if your 1099-R form has a 1, in box 7.  If a known exception applies, you’ll see a 2 in that box.

1095-A, B or C – Line 61:  If you’ve been preparing your taxes for the last couple of years, you’ll have noticed these new forms. As part of Obamacare, the government requires most people to purchase minimum health insurance overage. If not, they incur a penalty, unless they qualify for an exemption. The vast majority of us have insurance through our employer and just need to check the full-year coverage box on line 61. If your company that has fewer than 50 full-time employees, then you will get a form 1095-B from the insurance provider and/or your employer. If you work for a larger company, then you will get Form 1095-C.  Lastly, you get a 1095-A if you purchased your insurance through a state or federal exchange (i.e., the marketplace). While these are just informational forms, they are important to hold on to in case you need to prove that you had minimum coverage.



W-2 and 1099-R – Line 64:  You’ll need your W-2 or 1099-R one last time as you complete your return. Box 2 on your W-2 and Box 4 on your 1099 shows how much you’ve already paid towards your income tax liability.  Ideally, the money that’s been withheld will be close to the amount that you owe. If the amount withheld was way too high or way too low, you can adjust your payments on Form W-4 with your employer or Form W-4P for your pension.

1040 –ES – Line 65: If you’re self-employed, you are required to make quarterly payments to the government to cover any potential tax liability. You make those payments on Form 1040-ES. To report these payments, simply add up the amount paid each quarter and put that total on line 65 of your return.

1095-A – Line 69:  Here’s one last use for your health insurance form, if you bought your coverage through the marketplace. You need to figure out your net premium tax credit. This credit provides a subsidy meant to keep your coverage affordable. You have the option of getting it in advance or waiting until you file your return. If you’ve waited until filing to apply for the credit, include the amount you are entitled to on line 69. If you received it in advance and aren’t entitled to as large of a credit because of an unexpected increase in income, you put the amount you now owe on line 46.


There you have it. I hope that you found this summary helpful and informative. As always, feel free to email, message or tweet me with the links below. Happy filing!