Most people spend more time planning their vacations than putting together the information needed to complete and file their income tax returns.  Most only have either an envelope or file into which they stick their “tax related” documents. I am a proponent of more is better than less.  I would rather ignore duplicates and non-related information than continue to call clients for more information.  The better the information submitted, the more accurate the finished product will be.

We are all creatures of habit to a degree.  We reach out to our tax preparer around the same time each year, and we provide the same information to our tax preparers year after year.  Frequently we look through the file we sent the prior year and check off that we have the same documentation for the current tax year as we submitted last year.  In many cases that may be enough.  Many times when we have a change in our tax information, we think everyone may know about it so we don’t submit it.  For example, we may change our address, change jobs, our job may change payroll companies and we may receive an additional W-2, we may be transferred to a different payroll center across state lines.  These are just a few examples of the changes that we may go through during a tax year without giving it too much thought.

In a year where tax reform is in the news, you may be thinking more about taxes than you would probably like to.  Just as some people might be more likely to follow a stock tip they overhear at a restaurant than one they hear from their investment advisor, you might be more likely to follow one of the talking heads on TV about suggestions to reduce your taxes this year by moving expenses from next year to this year or the other way around.  Just as the investment tip might not fit your risk tolerance level, there is no one piece of tax advice that fits everyone equally.  You should only seek advice from someone that knows your tax situation, or asks you questions so that they can make an educated recommendation.

In order to get your tax information as accurate as possible, I suggest going through the following sample guidelines:

• Personal information: any changes in address, family members, divorce, marriage, remarriage children attending college…
• Health care coverage: Coverage at work, an HSA account, COBRA, coverage through the affordable care act though the marketplace…
• Sources of income: wages, self employment income, alimony, interest, dividends, rental income, K-1 income, gambling winnings, distributions from IRAs or other retirement accounts, gains or losses from the sale of securities or investment properties…
• Deductions: Mortgage Interest, property taxes, estimated taxes, unreimbursed medical expenses (including mileage), charitable donations (cash and non cash), gambling losses, investment property expenses…
• Adjustments to income: Educator expenses, student loan interest, traditional IRA contributions, penalties for early withdrawal of savings, alimony paid, self employed health insurance deduction…

It’s important to realize that no two tax unit’s (individuals, families, or heads of households) are going to be exactly alike.  If you work for someone and get a W-2, your deductions to that income are limited to unreimbursed work related expenses that exceed 2% of your adjusted gross income.  If you know someone who is self employed, they can deduct any expense directly related to the production of income, without having to exceed the 2% threshold first.  Some have greater medical expenses, make more charitable donations, have investment property, have young children, college age children, support a parent or other relative.  They could also have capital losses on the sale of investments or business property.  All the things I just mentioned can have a significant effect on someone’s tax bottom line.  It can increase a refund or reduce an amount owed.

The bottom line is the accuracy of the finished return is only as accurate as the documentation the preparer recieves.