Tax season is upon us and one of the most common questions we get from clients this time of year is “What tax documents should I be expecting?”
This is a list of the most common items you will need to collect to prepare your taxes, including the ones that relate to your investment accounts and everything else we can think of!
For our clients, we can help you gain access to any documents related to your investments if you don’t get them in the mail or aren’t sure how to get them from SchwabAlliance or your Together Planning portal.
Documentation of your Income:
W-2 form(s): If you hold more than one job, you’ll need to provide W-2s from each employer. If your employer makes a mistake on your W-2 and issues you a form W-2c, bring the corrected W-2c to your tax preparer as well.
Schedule K-1: for trusts, partnership and S corporations, including publicly traded partnerships that you may own in an investment account.
1099-R: if you received distributions from a pension, annuity, IRA, insurance contract and other retirement accounts. If you receive one of these for a Roth conversion, and you converted after-tax (nondeductible) IRA contributions, make sure Form 8606 was filed to document that the converted amount was after-tax and therefore not taxable.
Form 1099 and Form 1099-MISC: for self-employment income.
Form 1099-DIV: for dividends and distributions. You will receive this for any brokerage account or direct investment you have. Both Schwab and TD Ameritrade include this information on a consolidated form for taxable accounts. Schwab calls it a 1099 Composite and TD Ameritrade calls it a 1099 Consolidated. These forms also include interest (1099-Int for your account) and information about capital gains and losses to report on Form 8949.
Form 1099-G: for unemployment income or a state tax refund. Be aware that tax refunds have to be reported, but they will only be taxable to you as income if you were able to deduct the tax payment in the first place. For example, if you paid state and local taxes of $13,000 in 2022, you were only able to deduct $10,000, so if you receive a tax refund from your state of $500, it has to be reported but it will not be taxable.
Form 1099-INT: for interest income. This one is a much bigger deal now that bank accounts are paying significant interest. You will get one of these from any bank or institution that paid you interest.
Form 1099-LTC: for Long Term Care reimbursements.
Form 1099-Q: for distributions from a qualified education plan (like a 529). You will not need to turn in receipts to the IRS to demonstrate that the distributions were made for qualified educational expenses, but you do need to have them.
Form 1099-QA: for distributions from an ABLE account.
Form 1099-SA: for Health Savings Account and Medical Savings Account distributions. Similar to 529s, you will not need to turn in receipts to the IRS to demonstrate that the distributions were made for qualified healthcare expenses, but you do need to have them.
Form SSA-1099: for Social Security benefits.
Form RRB-1099: for railroad retirement benefits.
Alimony: if you were divorced in 2019 or later and are receiving alimony, those payments are included in your income. This does not apply to child support payments.
Rental income: If you own any properties that you rent to others, you need to report that income, even if you don’t receive an official tax form to document it. You should also report any expenses related to the property.
Documentation of your potential deductions:
Form 1098: your Mortgage Interest Statement, which comes from the company that services your mortgage loan.
Form 1098-C: for the donation of an automobile, boat or aircraft worth more than $500 to a tax-exempt organization.
Form 1098-E: for interest you paid on a student loan during the preceding year.
Form 1098-T: the Tuition Statement, documenting how much you paid in tuition for post-secondary education.
Form 1040ES copies: for a record of estimated tax payments made.
Form 5498: If you contributed to an IRA, you will receive a Form 5498. These are not sent until May, because you can make an IRA contribution for 2023 any time before the tax deadline for 2023 (April 15, 2024). If you contribute to an IRA for 2023, and that contribution is deductible, make sure your tax preparer reflects the contribution as a deduction. If the contribution is not deductible, make sure your tax preparer files Form 8606 to document the after-tax nature of the contribution. If you contribute to a retirement plan through work, this information is reflected in Box 12 of your W-2.
Form 5498-SA: If you contributed to an HSA outside of a payroll deduction, you will receive a form 5498-SA. If you contribute through work, this is reflected in Box 12 of your W-2.
Property taxes paid: if you itemize deductions, this will be included in the amount you can deduct for state and local taxes.
Alimony payments: If your divorce was in 2019 or later and you are paying alimony payments, those are deductible. Child support payments are not deductible.
Charitable donations: If you itemize deductions, you can include amounts donated to charities as deductions.
Contributions to 529 plans: Some states, including Georgia, allow taxpayers to deduct contributions to 529 plans from their state taxable income. Take this information to your tax preparer too!
Medical expenses: If you had significant medical expenses in 2023 (more than 7.5% of your Adjusted Gross Income) and you are itemizing expenses, these are deductible.
Expenses related to businesses or rental properties: Collect receipts and mileage reports for any expenses related to your business income or rental income. Your tax preparer will also know how to depreciate your rental properties and the improvements you make to them. Don’t forget any interest or property taxes you paid for the rental properties.
Special deductions to be aware of this year:
Clean or Electric vehicles: On Schedule 3 of Form 1040 (Additional Credits) there are three lines relating to Clean Vehicles, Electric Vehicles, and Previously Owned Clean Vehicles. There are income restrictions on who can claim these credits, but if you purchased a clean vehicle in 2023, take that information to your tax preparer.
Residential Clean Energy: If you added solar panels, a solar water heater, a qualified geothermal heat pump, or even a small wind energy unit, those costs qualify for a credit using Form 5695 and reported on Schedule 3.
Energy efficient home improvements: Certain energy star certified appliances such as water heaters, furnaces and air conditioners also qualify for credits. You can find which models qualify at https://www.energystar.gov/about/federal_tax_credits.
If you need help with any of these items, Together Planning is here for you!
Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations may vary. Therefore, this information should be relied upon when coordinated with individual professional advice.
