2024 Tax Season Checklist: Essential Documents You Need

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2024 Tax Season Checklist: Essential Documents You Need

Tax season can be a daunting time for many. Gathering the necessary documents, understanding which deductions and credits you may be eligible for, and ensuring your tax return is accurate can feel overwhelming. However, with the right preparation, you can navigate tax season with greater ease and confidence. This comprehensive guide will provide you with a checklist of essential documents to collect when preparing for your 2024 tax return, empowering you to approach tax filing with organization and clarity.

This guide will cover key areas such as income sources, potential deductions, eligible credits, and other important considerations. By carefully reviewing this information and gathering the necessary documentation, you can streamline the tax filing process and ensure you have all the information you need to accurately report your income and maximize your potential tax benefits.

Income: The Foundation of Your Tax Return

Your tax return starts with your income. To ensure accurate reporting, gather the following documents:

• W-2 Forms: If you were employed, collect all W-2 forms from each employer. These forms provide details about your wages and the taxes withheld from your paycheck.
• Self-Employment Income: If you were self-employed, gather all necessary forms, including 1099-NEC, 1099-MISC, and 1099-K, which report income from various sources. Maintain detailed records of your business expenses for potential deductions.
• Investment Income: Collect forms like 1099-B (for stock sales), 1099-DIV (for dividends), 1099-INT (for interest income), and 1099-R (for distributions from retirement accounts).
• Other Income Sources: Don't forget to account for other sources of income such as rental income, royalties, and any income from the gig economy (e.g., income from platforms like Uber, Lyft, or freelance work).

Deductions: Claiming What You're Entitled To

Deductions can significantly reduce your taxable income. To maximize your deductions, gather documentation for:

• Business Expenses (if self-employed): Maintain records of all deductible business expenses, including home office expenses, travel costs, and professional fees.
• Retirement Plan Contributions: If you contributed to a 401(k), IRA, Roth IRA, or other retirement plans, gather documentation to support your deductions.
• Charitable Contributions: Keep records of all charitable donations, including receipts, canceled checks, or bank statements.
• Medical Expenses: Gather medical expenses exceeding the 7.5% of Adjusted Gross Income (AGI) threshold.
• State and Local Taxes (SALT): Gather documentation of state and local income taxes, property taxes, and sales taxes paid.
• Mortgage Interest: If you have a mortgage, gather Form 1098, which provides details on the interest paid on your mortgage loan.
• Home Equity Loan Interest: If you have a home equity loan, gather documentation of the interest paid on that loan.
• Real Estate Transactions: If you sold your home, gather Form 1099-S and documentation of your cost basis (e.g., purchase price, improvements) to determine any capital gains or losses.
• Student Loan Interest: If you paid interest on qualified student loans, gather Form 1098-E or other statements showing the amount of interest paid.
• Alimony Payments (if applicable): If you paid alimony (excluding child support, property settlements, etc.) from a divorce finalized before January 1, 2019, gather any relevant details (e.g., alimony paid, date of agreement, etc.) and ensure you have the alimony recipient's Social Security number.
• Other Deductions: Review the provided checklist (refer to the image) for a comprehensive list of potential deductions.

Credits: Reducing Your Tax Liability

Tax credits directly reduce the amount of tax you owe. Gather documentation to support any applicable credits, such as:

• Child Tax Credit/Dependent Care Credit: If you have qualifying children or dependents, gather documentation to establish dependency status (e.g., age, relationship, support, custody agreements, Form(s) 8332, etc.) and substantiate costs paid (e.g., childcare, education, adoption expenses, etc.).
• Education Credits: If you, your spouse, or your dependents incurred any qualifying education expenses, gather Form(s) 1098-T, Form(s) 1099-Q (for 529 distributions), receipts, etc.
• Other Credits: Explore other potential credits that may apply to your situation, such as the Earned Income Credit, the American Opportunity Tax Credit, the Lifetime Learning Credit, foreign tax credits, and any other credits listed on the provided checklists.

Additional Considerations

• Gift Tax: If you made a gift in excess of the annual gift tax exclusion amount ($18,000 in 2024), be mindful of any gift tax reporting requirements (e.g., Form 709), as well as any elections that may reduce your gift tax liability (e.g., gift-splitting, 529 5-year averaging, etc.).
• Qualified Charitable Distributions (QCDs): If you made QCDs from your IRA, be mindful that these donations should not be reported on Form(s) 1099-R and may be excluded from taxable income (if eligible).
• Non-Deductible Traditional IRA Contributions: If you made non-deductible Traditional IRA contributions (e.g., for Backdoor Roth purposes), ensure that all contributions (i.e., your basis) are properly reported for current and previous tax years, and document the value of any Traditional IRAs as of the end of the year.
• Rental Property: If you own a rental property, review your property value to determine any potential depreciation deductions. Gather details of your time spent on rental activities (e.g., personal vs. rental usage) as well as details regarding any income and/or expenses related to your rental property.
• Student Loan Interest Deduction: If you paid interest on qualified student loans, gather Form 1098-E or other statements showing the amount of interest paid.
• Other Deductions: Review the provided checklists (refer to the images) for a comprehensive list of potential deductions, such as deductions for qualified business income (QBI), student loan interest, and other eligible expenses.
• State-Specific Tax Issues: Consider any state-specific tax issues that may apply to your situation.

Navigating the tax code can be complex and time-consuming. By carefully gathering the documents outlined in this checklist, you can streamline the tax filing process and ensure you have the necessary information to accurately report your income and claim all eligible deductions and credits.

While this guide provides a comprehensive overview of essential documents, it's important to remember that tax laws and regulations are subject to change. If you have any questions or uncertainties regarding your specific tax situation, it's always recommended to consult with a qualified tax professional.

At Total Clarity Wealth Management, we can assist you with your overall financial planning, including tax planning strategies. We can connect you with a valued network of qualified tax professionals who can assist you with your tax preparation needs.

By working together with your financial advisor and tax professional, you can navigate the complexities of tax season with confidence and ensure your financial plan is aligned with your overall financial goals.

You are under no obligation to use the services of any of the entities referred, and may choose any qualified professional to provide tax services.  These entities and their services are not affiliated with LPL Financial and Total Clarity Wealth Management, Inc..