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Documents To Keep Track Of Before Filing Taxes

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Documents To Keep Track Of Before Filing Taxes

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Documents To Keep Track Of Before Filing Taxes

Tracking tax documents can be daunting, especially if you are self-employed or have a complex financial situation. However, you can make the process much smoother with a little organization and attention to detail. 

If you’re wondering what you need to stay on top of regarding your documents and taxes, this blog post can help. 

Tips to keep in mind when organizing tax documents

Whether you’re organizing your documents at the end of the year or before tax season begins, you should run through a checklist of what’s important and what could be discarded. Here are our tips: 

  • Keep all of your tax-related documents in one place. This could be a physical or digital file folder on your computer. By keeping everything in one place, you can easily access the documents you need when it comes time to file your taxes.
  • Make copies of important documents. It's always a good idea to have backup copies of important documents, including tax-related ones. This will protect you if the original documents are lost, damaged, or stolen.
  • Keep track of deadlines. It's important to know the deadlines for filing your taxes and submitting any necessary documents. Mark these deadlines on your calendar and set reminders to ensure that you get all important dates.
  • Organize your documents by tax year. When you receive a tax-related document, make sure to file it in the folder for the appropriate tax year. This will make it easier to find your documents when preparing your tax return.

How to track documents for taxes

Understanding what documents you need to track can be intimidating. After all, to qualify for deductions, credits, or just to have a general understanding of your income and how it affects your taxes involves staying on top of paperwork, paperwork, and more paperwork. It’s why you should stay organized throughout the whole process. Here are some additional tips to help you track your tax documents:

  • Create a list of the documents you need to track. This could include items such as receipts for business expenses, charitable donations, medical expenses, and investment income. By creating a list, you can ensure that you have all of the necessary documents and can easily check them off as you receive them.
  • Use a spreadsheet or other digital tool to track your documents. A spreadsheet can be a useful tool for organizing your tax documents and keeping track of important information, such as the date you received a document, its source, and any relevant notes.
  • Be sure to include any documents related to deductions and credits. In addition to the documents you need to report your income, you will also need documentation for any deductions or credits you claim on your tax return. This could include things like receipts for charitable donations, medical expenses, and childcare expenses.
  • Keep your tax documents for at least three years. In general, the IRS recommends that you keep your tax records for at least three years. This will give you enough time to review and verify the information on your tax return in case of an audit. If you are trying to decide whether to keep a particular document, it's better to err on the side of caution and keep it.
  • Consider hiring a professional. If you need help tracking your tax documents or preparing your tax return, consider hiring a professional, such as a tax preparer or accountant. They can help you navigate the tax system and ensure that you are in compliance with all applicable laws.

What tax credits require tracking documents? 

Regarding claiming tax credits, certain credits require specific documents to be eligible. For example, if you are claiming the Child and Dependent Care Credit, you will need to provide documentation such as the name, address, and Taxpayer Identification Number of the care provider, as well as the dates and costs of the care.

Other tax credits requiring specific documentation include the Earned Income Tax Credit, the American Opportunity Credit (for education expenses), and the Foreign Tax Credit. Generally, it's a good idea to consult with a tax professional or refer to the IRS website to determine which documents you need to claim a specific tax credit.

In addition to documents related to specific tax credits, you will also need documentation for other items you claim on your tax return, such as deductions for business expenses, charitable donations, and medical expenses. By keeping track of these documents and making sure you have the necessary documentation, you can ensure that you can claim all eligible credits and deductions on your tax return.

What documents should small businesses, freelancers, and self-employed individuals track for taxes? 

Small businesses have a number of tax-related documents that they need to track to file their taxes properly. Some of the key documents that small businesses should track include:

  • Receipts for business expenses: You can claim deductions for a wide range of expenses, including office supplies, travel, and business-related meals and entertainment. It's important to keep receipts for these expenses to claim the deductions on your tax return.
  • Records of income: You need to accurately track their income to report it on their tax return. This includes any sales, fees, or other forms of income that the business receives.
  • Receipts for capital expenses: If you make any large purchases necessary for the business, such as equipment or vehicles, you can claim a deduction for these items' cost over time. To claim this deduction, you must keep receipts for these purchases.
  • Records of payroll and employee taxes: If you have employees, you need to track the payroll and employee taxes that you withhold from your employees' paychecks. This includes things like Social Security and Medicare taxes, as well as any state and local taxes.
  • Records of business-related travel: If you or an employee travels for business purposes, either can claim deductions for certain expenses, such as transportation, lodging, and meals. To claim these deductions, you will need to keep records of the dates and destinations of the trips and receipts for any related expenses.

What tax forms do freelancers, small businesses, or small businesses need to know? 

Freelancers, small businesses, and self-employed individuals all have different tax forms that they may need to file, depending on their specific circumstances. Some of the common tax forms that these groups may need to file include the following:

  • Schedule C (Form 1040): This form is used by freelancers and self-employed individuals to report their business income and expenses. It is attached to the individual's personal tax return (Form 1040).
  • Schedule SE (Form 1040): This form is used by freelancers and self-employed individuals to calculate and pay their self-employment taxes, which include Social Security and Medicare taxes. It is attached to the individual's personal tax return (Form 1040).
  • Form 1099-MISC: This form is used by businesses to report payments made to freelancers and other independent contractors. The business is required to provide a copy of this form to the freelancer and to the IRS.
  • Form W-2: This form is used by businesses to report wages paid to employees and the taxes withheld from their paychecks. The business is required to provide a copy of this form to each employee and to the IRS.
  • Form 941: This form is used by businesses to report their quarterly payroll taxes, including federal income tax, Social Security tax, and Medicare tax withheld from their employees' paychecks.
  • Form 1120: This form is used by corporations to report their income, gains, losses, deductions, and credits.
  • Form 1065: This form is used by partnerships to report their income, gains, losses, deductions, and credits.
  • Form 1040-ES: This form is used by freelancers, small businesses, and self-employed individuals to make estimated tax payments to the IRS.

How can Taxfyle help? 

Stay up-to-date with tax legislation, tracking documents, and navigating different forms. Taxes are a lot of work. Do they have to be? 

At Taxfyle, we take the work of doing taxes out of your hand. Whether you’re an individual filing taxes for the first time or run your own small business, we can help make filing taxes less stressful. 

We connect you to an experienced CPA or EA who will make sure your tax return is filed correctly and on time so that you can spend your time on something else. 

Legal Disclaimer

Tickmark, Inc. and its affiliates do not provide legal, tax or accounting advice. The information provided on this website does not, and is not intended to, constitute legal, tax or accounting advice or recommendations. All information prepared on this site is for informational purposes only, and should not be relied on for legal, tax or accounting advice. You should consult your own legal, tax or accounting advisors before engaging in any transaction. The content on this website is provided “as is;” no representations are made that the content is error-free.

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published

February 13, 2023

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Ralph Carnicer, CPA

Ralph Carnicer, CPA

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