Personal Finance
January 15, 2015

How to Prep for Your Taxes Before You Get Your W-2

Simple. Thrifty. Living.

Although waiting until the very last moment to file an income tax return is the subject of plenty of cliches, many people are actually eager to complete this task as soon as they possibly can. If you expect a tax refund this year, or even if you just want to get the whole tax season over with quickly, you may be anxiously counting down the days until Jan. 31, which is your employer’s deadline for sending W-2 forms. You’ll be ready to complete your taxes the moment your W-2 arrives if you follow these three simple steps.

The size of this task varies greatly depending on the complexity of your financial situation. Determine the amounts you spent on health insurance, child care, school tuition, mortgage interest and similar living expenses by reviewing your bank records and the year’s paid bills. Personal finance and budgeting apps can sort this information and present it to you in tidy little summaries, but you can also use a calculator and calculate each expense category by hand.

You’ll also need records of the money you received during the year: Did you get any alimony? Did you make a few dollars selling handmade birdhouses? The IRS is interested in your entire income stream, as well as any large gifts or major purchases you might have made. If you run a small business in addition to your regular job, your record keeping will naturally be much more involved and will include all business income and expenses.

If you use an online tax preparation program, locate the log-in information that you used for your account last year. It’s always best to log in to the same account each successive tax year because the program will pre-fill some of the blanks and make your task quicker. If you’re starting from scratch, you’ll need birth dates and Social Security numbers for everyone in your family. Tax forms on paper do still exist and can be procured free from the IRS or a post office; however, the IRS is trying to transition to an online tax system and provides refunds much more quickly if you file online.

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