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In other words, don't play hide and seek with the IRS or claim ignorance of tax laws because under reporting income is a serious matter. Not reporting income because you did not receive a 1099 for work as an independent contractor might seem to be a convenient excuse at tax preparation time but it is no defense against civil fraud penalties that the IRS would impose if they discover your unreported income.
Income Items Checklist
- Form W-2 Annual Wage Statements
Review last pay stub and compare to W-2 for accuracy. Peruse check stub for charity donations and health insurance payments withheld from your pay. Attach all form W-2's to the first page of your tax return
Interest & Dividends
You will receive IRS Form 1099-Int and 1099-Div reporting your interest and dividend income. These forms may be part of a combined tax reporting statement issued by your Investment Brokerage Company. Don't forget about interest charged on personal loans to friends and family. - Stock and mutual fund sales-Form 1099-B.
Report sales of stocks and mutual funds on Form 1040, Schedule D. Choose a stock broker who tracks your cost for these investments, otherwise keep records of your purchases and dividends that were used to buy additional shares. Your cost for property received as a gift is the same as the donor's cost. Cost of property received through an inheritance is the fair market value of the property at date of death.
- Sale of investment property such as real estate, timber or coins
- Retirement Income - Form 1099-R
Report distributions from your retirement account. Early distributions (before age 59 ½) may be subject to a 10% pre-mature distribution penalty
- State Tax Refunds -If you itemized last year, report your state refund on page 1 of form 1040.
Rental Income - Income received from renting real or personal property. Complete form 1040 Schedule E- Income from self employment - Complete 1040 schedules C, SE and form 4562. Don't forget about recording inventory, business mileage and the office in home deduction.
- Income from Partnerships, S Corporations and Trusts
--You should receive a 1065 K-1 from a partnership, an 1120S K-1 from a Subchapter S Corporation and 1041 K-1 from a Trust.
- Other Income: Alimony, gambling and lottery winnings, jury duty pay, prizes, social security/railroad retirement benefits, unemployment compensation, employer paid group term life insurance in excess of $50,000, cancelled debts, royalty income, directors fees, educational savings account withdrawals.
We hope this tax preparation checklist helps to get you started toward preparing your tax return. It is not the intention of this tax preparation checklist to list every piece of information that might be relevant to the preparation of an income tax return.
Please consult IRS Publication 17 for more information about filing requirements, filing status, what to include in income, what you can deduct and where to mail your tax return. If you are still confused after perusing this tax preparation checklist, please consider seeking the services of an experienced tax preparer.
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