Editor's Note: This article is part of our 2014 Tax Tips series. Robert Flach is an expert with more than 40 years of experience as a tax professional and also blogs as The Wandering Tax Pro.
NEW YORK (MainStreet) Dear Tax Client:
I want to make sure you take advantage of all the tax deductions and credits to which you are entitled but I can only do this if you give me complete and accurate information.
When sending me your tax information, be sure to include all of the following information (if it applies to your situation):
- Social Security numbers and dates of birth for you, your spouse and all dependents.
- W-2 forms (all copies), and the final pay-stub for the year for all employers. Please make a copy of your W-2s to keep with you before sending them to me.
- All 1099s (for interest, dividends, gross proceeds and other income), 1098s (for mortgage interest, contribution of a motor vehicle to charity, student loan interest and tuition and fees) and K-1s (and all attachments) from all sources. Do not give me your information until you have received everything.
- All year-end statements from brokerage and mutual fund accounts and any AVERAGE COST STATEMENTS received from a mutual fund on the sale of fund shares.
Provide a A detailed listing of:
- itemized deductions (unreimbursed medical payments, charitable contributions, and job-related, job-seeking, and investment expenses),
- rental income and expenses, and/or
- self-employment income and expenses.
I don't need to see actual bills, receipts or cancelled checks. For the most part I just need numbers. Do not send me a pile of medical bills and receipts and insurance statements and expect me to sort through them to determine your allowable medical deduction.
I also do not need to see proof or acknowledgement of each of your individual cash donations. I only need a listing of your 2013 contributions. FYI, you can only deduct contributions for which you have hard copy documentation. I do, however, want to see any receipts, acknowledgments or listings for non-cash contributions clothes, books, household items, furniture, etc - to Goodwill, the Salvation Army or your church.
When I say "I only need numbers," I mean specific numbers for deductions you are claiming. I need you to tell me "$1,023.50" or "$20.00 per week for 50 weeks" or "4,638 miles"! "Claim the maximum" or "Whatever I am allowed" or "Same as last year" is not appropriate. The maximum is what you actually paid and you are allowed what you actually paid!
If any of the following situations apply to you, I will need additional information -
IF YOU SOLD STOCK, BONDS, OR MUTUAL FUND SHARES I need the date of purchase and cost of the investment sold. This information may be included in the Year-End Consolidated Form 1099 Statement you received from the brokerage firm or mutual fund house. If cost basis information for all trades is not included on this statement, have your broker provide you with a "profit and loss" report for all the year's trades that reconciles to the Form 1099B for each account. If you sold an investment you inherited, I need to know number of shares you inherited and the date of death of the person from whom they were inherited.
IF YOU SOLD REAL ESTATE I need the Closing/Settlement Statements for both the purchase and sale of the property, plus the cost of improvements made to the property over the years.
IF YOU PURCHASED REAL ESTATE I need the Closing/Settlement Statement for the purchase of the property. For rental property, I will need the separate amounts of "assessed value" for land and improvements from the tax bill.
IF YOU ARE RECEIVING IRA DISTRIBUTIONS I need the year-end statements for all IRA accounts.
IF YOU RECEIVED A DISTRIBUTION FROM A PENSION PLAN I need to know if you rolled-over the distribution to an IRA.
IF YOU ARE PAYING ALIMONY I need to know the Social Security number of your ex-spouse, the amount of alimony paid for the year and any other required payments, such as health insurance premiums and real estate expenses, that you are making on behalf of your ex-spouse.
IF YOU PURCHASED A CAR, TRUCK, SUV, MOTORCYCLE, BOAT OF AIRPLANE I need to know the amount of sales tax paid.
IF YOU REFINANCED A MORTGAGE I need the Closing/Settlement Statement for the refinance and the term of the new loan.
IF YOU DONATED A CAR TO CHARITY I need to see all the paperwork you received from the charity, especially the Form 1098-C, plus the original cost and date of purchase of the car.
IF YOU HAVE GAMBLING WINNINGS I need to see details of all your gambling losses.
IF YOU HAVE DEPENDENTS IN COLLEGE I need all Form 1098-Ts received and all the "Burser's Reports" for the year that show all tuition and other payments. You may be able to print-out a financial report from the college's website. I also need to know what was spent on course-related books, supplies and equipment, and if the student received any private scholarship or aid money that was not paid directly to the college.
IF YOU PAID FOR CHILD CARE, WHETHER DIRECTLY OR THROUGH A FLEXIBLE SPENDING ACCOUNT I need the name, address, Social Security or Employer Identification number, and amount paid for all child-care providers. If you have more than one child I need to know how much you paid for each child. You may be able to get detailed statements from the provider(s).
IF YOU PURCHASED AN ENERGY-EFFICIENT PRODUCT FOR YOUR HOME I need a description of the items you purchased, the purchase price and a Manufacturer's Certification or confirmation that the purchase qualifies. You must independently verify that your purchase qualifies for the credit.
If this is the first year that I am preparing your Form 1040, I will also need to see copies of your 2010, 2011, and 2012 tax returns.
I look forward to preparing your tax returns this year.
Very truly yours,
YOUR TAX PROFESSIONAL
--Writtnen by Robert D. Flach for MainStreet