It’s everyone’s favorite time of year: tax season! Have no fear; Minnesota School of Business-Richfield’s (MSB) Accounting Program Chair Chris Strand has some helpful tax preparation tips to alleviate your stress.
When it comes to filing your tax returns, whether you are a do-it-yourselfer or you look to a professional for assistance, preparation is key. Here’s Chris’s list of documents you’ll need to locate and have ready when you sit down to begin the long, arduous task that is tax filing:
First you will need to show proof of income. For this you will need your W2s, any 1099 forms (documenting interest or dividend income, pensions and annuities, state income tax refund, or unemployment compensation), a record of any alimony received (amount must match the amount of the deduction your ex-spouse is claiming), and self-employment income.
Importantly for students, you must list any scholarships as income. Other miscellaneous sources of income may include jury duty pay, gambling or lottery winnings, rent income, retirement plan distributions, prizes or awards, and estate or trust income.
Next you will need all of your deductions and credit. Thankfully Chris provided us with many examples of those.
Two of the most important deductions for students are college tuition and student loan interest paid. Day care expenses (provided by the day care provider), mortgage interest paid, and property taxes paid are other substantial deductions. Alimony paid, charitable contributions, losses due to theft or accident, and business or self-employment expenses are deductible. Any medical expenses that have not been reimbursed by your insurance carrier, including your premiums and contributions to a Health Savings Account make the list, as does your retirement plan contributions.
Chris recommends that you have available the amount of your federal and state income tax payments, a log of your business auto mileage, and a tally of any job related moving expenses. If you sold your home in 2013, you will need to have the financial figures handy. If you adopted a child this year, you may qualify for a deduction. Big bonus for many students: job hunting expenses are deductible!
So now that you have your shoebox full of receipts ready, filing taxes hopefully will be a bit simpler this year. And if you still find yourself struggling, we have a little suggestion…