Believe it or not, the start of the 2015 tax-filing season is right around the corner. While there has been speculation that the start of the coming filing season may be delayed (as it was in 2014), it’s never too soon to begin preparing. Not only might you get your refund sooner if you file early but you may also be able to help prevent tax identity theft.
When a thief commits tax identity theft, he or she may use your Social Security number (SSN) to file a tax return and obtain your refund before you do. When you try to file, you’ll receive a notice from the IRS indicating that more than one return was filed using your Social Security number.
If you file before the thief, however, it can be the thief that receives this notice—not you.
To help you prepare to file taxes as early as you can in the 2015 tax-filing season, remember to do the following:
Gather your W-2s and 1099s. If you’re an employee—you’re paid wages or a salary—you’ll receive a W-2 from any company for which you worked in 2014. If you received interest or dividend income, sold stock, or worked as an independent contractor, you’ll receive a 1099 that indicates how much income you should report.
The deadline for W-2s and 1099s to be distributed is Jan. 31. If you worked at more than one company this year, make sure that each one has the mailing address where you will be in January. If you haven’t received these documents by Feb. 14, you can call the IRS at 800-829-1040. The IRS will request the W-2 or 1099 from your employer/payer and send you Form 4852 to be used as a substitute.
Tip: If you’re waiting on 1099s, keep in mind that you don’t actually need them in order to file. Generally, you don’t need to submit 1099s with your return. While your 1099s can be helpful in calculating how much income you have to report, as long as you have that information from any source, you can simply put it on your tax form.
Review your investments. Review all of the securities you own to ensure that the brokerage has the correct basis (purchase price and splits or adjustments) for each investment. If not, use this time to update the data. Even before the first round of 1099s are mailed out, you can get a printout of all your trades with the correct profit or loss and your dividends, interest, and fees.
This is also a great time to set up online access to your investment, retirement, and pension accounts if you haven’t done so already.
Tip: If you own substantial investments in mutual funds, you may not want to file before late February. Investment brokerages must issue preliminary 1099s in mid-February under law. In March, however, after they finish all the accounting, the corrected 1099s are issued—often with quite different numbers in the capital gains and dividends boxes.
Contact the Social Security Administration (SSA). Lately I’ve noticed that some retirees are not getting their SSA-1099s, which show the benefits they have received for the year (non-resident aliens who received or repaid Social Security benefits will receive form SSA-1042S instead). These are mailed out in January, so if you or whomever you’re caring for have not received them by February, be sure to contact the SSA and get that straightened out.
Tip: Make a list of income from all government sources. People often forget about taxable state refunds and unemployment income. You will find your state refunds on your prior year tax return. To determine your unemployment benefit amount, log into your state’s unemployment database, or call or write to your state’s unemployment office, for your year-to-date statement.
Prepare for deductions. The primary deductions for early filers are home mortgage, property taxes, and charitable contributions. Gain access to your online mortgage account so you can see the year-to-date interest you’ve paid. This information should also appear on your January statement. If you have an impound account (also called an escrow account) in addition to your mortgage, you can see your property tax payment on your mortgage statements.
Tip:If you pay your property taxes directly to your local government rather than putting the money in an impound account, gather your records now or request the information from your property tax collector.
As for charitable deductions, they are only allowed if you have donated to a qualified charity. You can’t write off donations to individuals, political organizations, or political candidates. To claim a deduction of $250 or more, you must have a written statement from the organization that shows the amount of the donation and a description of the donated property. If you cannot find your receipts, start calling around and getting them now.
If you take these steps now, you could be among the first to get your refund.
Eva Rosenberg, EA is the publisher of TaxMama.com ®, where your tax questions are answered. She is the author of several books and ebooks, including Small Business Taxes Made Easy. Eva teaches a tax pro course at IRSExams.com and tax courses you might enjoy at http://www.cpelink.com/teamtaxmama.