May 18, 2007, Newsletter Issue #65: Tax Preparation Documents

Tip of the Week

What is a "Tax ID number"? For an individual (and sole proprietor), this is your social security number. For a business owner, this is the Employer Identification Number. This number is used to set you apart from other taxpayers.

Employees. Your employer has until January 31, 2007, to send you the W-2 form from the previous year, which details your earnings and withholdings.  If you have not received this form by February 15, 2007 – call the IRS for help.

Other Income. For income you received other than wages, it will be reported on IRS Form 1099. This will include: interest, self employment income, dividends, capital gains, unemployment compensation, social security benefits (Form SSA), state and local income tax refunds, and sale of home. Also, if you received any distribution income from your pension, insurance contracts, or retirement plans – you need to report this income. Most of this information will be on a IRS Form 1099. Your paid preparer will need these documents to figure your total income.

Expenses. For expenses, you will need to take any receipts, cancelled checks, along with any summary statement you have prepared. Summary statements are prepared when you have multiple entries making up an amount, and the details are too cumbersome. For instance, mileage statements. If you have used your vehicle for business purposes throughout the year (and are claiming actual usage), you need to keep track of this. A Summary Statement will list your beginning and ending odometer readings, and the breakdown in total. You do not need to take all your month-to-month mileage logs into your paid preparer. Do have them available, however, if your paid preparer has any questions.

Last year’s tax return. Another item you will need to take to your accountant/paid preparer is your 2005 tax return. Your preparer will need this to compare your current year figures to. By checking last year’s income tax return, your preparer may notice items that were missed on this year’s. The person may also question any noticeable changes. It basically is a second check for them.

About LifeTips

Now one of the top on-line publishers in the world, LifeTips offers tips to millions of monthly visitors. Our mission mission is to make your life smarter, better, faster and wiser. Expert writers earn dough for what they know. And exclusive sponsors in each niche topic help us make-it-all happen.

Not finding the advice and tips you need on this Taxes Tip Site? Request a Tip Now!


Guru Spotlight
Ray Lokar