Sort Out Your Documents

Ready, set, organize. That's the first step in preparing your taxes. Before you enter a single number on a single form, gather all the documents and records that you need. Whether you tackle your taxes on your own or turn them over to an accountant, they will be less of a chore if you're organized. If your records are easily accessible, you will be less likely to miss a deduction you are eligible to claim.

Here's a checklist of the documents you are most likely to need. You can print out the list and cross off the ones that don't apply to you. Then, start gathering.

W-2. You will need one of these from each employer you worked for during the past year. The deadline to issue W-2s was January 31, so if you have not yet received one, contact your employer immediately. Verify that the information on the W-2, including your withholding and your retirement plan contributions, is correct by checking it against your final paycheck.

1099-INT. If you earned more than $10 in interest on a bank account or a certificate of deposit (CD), you will receive a 1099-INT from the bank. You will also receive this form if you cashed in savings bonds last year. Even if you reinvested the interest, it is still taxable income.

1099-DIV. The dividends earned from individual stocks in your portfolio and both the dividends and capital gains distributed from your mutual funds and money market accounts are reported on these forms. If you used the dividends to buy additional shares of the stock or mutual fund, you still have to pay taxes on the income.

Remember that mutual funds distribute capital gains incurred by the fund to all shareholders. So the capital gains reported on these forms are those distributed by the fund; they are not the gains you may have realized by selling shares of the fund. You may have to pay taxes on the reported dividends whether or not you have made money on the fund.

1099-B. If you sold stocks, bonds or mutual funds during the past year, you will receive a 1099-B from your broker or mutual fund company. Listed on the form will be the number of shares sold, the date they were sold and the amount you received on the sale. To figure out your taxes, you will also need to know the date you bought the shares and the cost basis, i.e., the amount you paid for the shares, including any reinvested dividends. Your broker or mutual fund company may keep track of this for you, so look for this information on the 1099 form, or give them a call. If they can't help you, dig up records of your purchase and year-end statements for the period you held the investments and calculate the cost basis of your purchase.

1099-G. You will receive this form if you obtained a refund of state and local taxes last year. If you deducted state and local taxes on last year's federal income tax return, then received a refund of all or part of those taxes, you will need to claim the refund as income this year. If you claimed the standard deduction last year, do not report the refund this year. The tax refund worksheet in the 1040 instruction booklet will guide you.

1099-R. If you received a pension or a distribution from an IRA or retirement plan, or you converted a traditional IRA to a Roth IRA, you should receive this form from your broker, pension plan or mutual fund company. You'll also get a 1099-R if you rolled over money in a retirement plan, such as a 401(k), to an IRA. If the rollover was handled properly, the "taxable amount" listed on the form should be zero.

1099-MISC. If you are self-employed and received $600 or more from a person or company, you should receive a 1099-MISC from them. This income is reported on Schedule C.

Schedule K-1. Money distributed from an estate, a trust, a partnership or an S corporation is reported on this form. These are the forms taxpayers love to hate because they are typically issued late (often in March or April) and are tricky to figure out.

Documentation of self-employment income and expenses. Ideally, you have been keeping records all year long and only need to print out a year-end report. Otherwise, count on spending several hours gathering and categorizing receipts. If you are self-employed, 60 percent of your health insurance can be deducted on your 1040 even if you don't itemize.

Receipts for employee business expenses. If you spent money on dues, uniforms, travel, meals or education for business and you have not been reimbursed by your employer, you may be able to take a deduction.

Proof of charitable contributions. If you gave $250 or less to an organization, you need a canceled check or receipt. For contributions greater than $250, you will need a written acknowledgement from the organization. If you donated used clothing or other items, value them at thrift-shop prices.

Medical expense records. Only medical expenses in excess of 7.5 percent of your adjusted gross income are deductible, so most people cannot take this deduction. But if your medical expenses top that limit, gather all your receipts and canceled checks.

Child-care records. If you paid a babysitter or child-care center, you will need the name, address, amount paid and Social Security number or employer identification number for each care provider.

Take a few minutes to check the numbers on all these documents to make sure they are accurate. If not, contact your employer, bank or broker and ask for a corrected form. As a final review, go through last year's canceled checks and credit card statements just to make sure you haven't missed a deductible expense.

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