Tax Prep Checklist: Everything You Need Before Filing In 2024

While putting together all the documentation needed to file your income taxes may appear daunting, a little preparation makes it much more manageable.

Whether you choose to file your income taxes using a professional accountant or go it alone and use tax software, the following tax prep checklist will simplify the process.

We have covered the most common documents and information you'll need, but depending on your circumstances, additional information may be required.

Key Takeaways

• Have your family's social security numbers and dates of birth handy.
• All income must be reported, including refunds, winnings, or benefits.
• Your deductions and credits must be supported by the relevant documentation.
• Any state or local taxes you've paid must have supporting documents.
• Remember to claim any self-employment expenses.

Tax Prep Checklist: Documents To Gather Before Filing In 2024

To make your life easier, go through this checklist first and circle the documents and categories that apply to your tax situation.

Then, work systematically through the list, ticking off each section as you complete it to record everything you've done.

Place all the original documents or copies in a file and separate them into categories and in date order to make them easy to find.

Write down social security numbers, bank account numbers, and birthdays on a sheet of paper and include it at the front of your file.

Make sure that you have all your bank statements, credit card statements, and contractual agreements available to provide accurate information.

While this list doesn't include information on how to file taxes, it shows you how to prepare your records so that you are well-prepared.

Here's the tax prep checklist that you can use to organize your tax submission documentation and information:

Personal Information

• Obtain a copy of your prior year's federal and state tax returns for reference.
• Note the social security numbers or tax ID numbers for you and your spouse.
• List your spouse's full name and date of birth.
• Write down your identity protection PIN (IP PIN) and your spouse's.
• List your bank account and routing numbers for tax payments and direct deposit of refunds.
• Include the name, location, account number, and highest value of any foreign bank account in your name.
• Don't forget to give details of any foreign residency and tax reporting.
• Note any estimated tax payments made during the year.
• Include prior year tax refunds applied to the current tax year.

Dependent(s)

• Note their dates of birth and social security numbers or tax ID numbers.
• Include copies of birth certificates or adoption decrees that prove your children's relationship for all claimed dependents.
• List their social security numbers or tax ID numbers.
• Include documents that prove your support, such as canceled checks, rent receipts, or utility bills.
• List their income for the year.
• Obtain a Form 8332 from the child's custodial parent if they transferred their right to claim a child to a noncustodial parent (if relevant).

Income

The following list includes all the forms or documents confirming the money you and your spouse received during the tax year.

Any 1099 Forms received by the middle of February will affect your income taxes and must be included in your submission to the IRS.

These income records include:

• W-2 Forms should be received by January 31, either physically or via email.
• The 1099-NEC covers any contract work.
• A 1099-MISC summarizes money earned from participation in gameshow winnings, any royalties, or rental income.
• 1099-K are issued for payments of $20,000 or more when goods and services are paid for through third-party processors such as PayPal or Venmo.
• Your investment earnings are captured on a 1099-INT for interest.
• The 1099-DIV form is for dividends.
• 1099-B is for broker-handled transactions such as interest, dividends, stock sales, or income from property sales, including escrow closing statements.
• Form 1099-S is specifically for income received from the sale of a residence or other property.
• Canceled debt information is recorded on Form 1099-C.
• Investment income is reported on the 1099 K-1 form with stock option information.
• Pensions, IRAs, and annuities are captured on Form 1099-R.
• Social Security benefits like health savings account income fall under Form SSA-1099.
• A 1099-G covers income from state and local income tax refunds as well as unemployment receipts.
• 1099-Q covers 529 plan or Coverdell ESA distributions.
• 1099-SA for distributions from a health savings account (HSA).
• Long-term care reimbursements fall under Form 1099-LTC.
• Form 6252 is used for prior year installment sale information and includes principal and interest collected during the year.
• An important financial tip is that alimony received in terms of a divorce or separation agreement is taxable if finalized on or before December 31, 2018.
• Don't forget to include a record of your ex-spouse's name and SSN when making these additional tax savings.
• Schedule K-1 is used for income from a pass-through business, trust, or estate.
• If you are engaged in part-time work, you may be interested in our gig worker vs independent contractor article, as there are key differences.

Rental Income

You must keep detailed rental income records and expenses related to your rental properties and any assets that are in service.

Include a list describing the asset, its cost, the date on which it was placed in service, as well as a calculation of depreciation.

Business Or Farming Income

Business or farming income requires a profit/loss statement and a schedule detailing all capital equipment information, including cost and date placed in service.

You should also include a fixed asset register that includes a full description, the original cost, and columns for current-year depreciation and accumulated depreciation.

If you need small business accounting tips, we have numerous articles to help you improve your administrative and accounting systems.

Self-Employed

Should you work from home and claim your office workspace, keep detailed records of your home size, office size, home expenses, and office expenses.

Break the home office information down into the square footage of your exclusive-use workspace and the total home square footage.

Include the following information in your file:

• Miles traveled in your vehicle for business purposes, as well as details of the vehicle, its cost, and vehicle sales tax paid.
• A record of all business expenses, including bank statements, check registers, credit card statements, invoices, and receipts.
• Business-use assets, including original cost, the date placed in service, and a depreciation schedule.
• A record of your estimated tax payments on Form 1040–ES.

State Tax Refund

There are several different forms that document income received as state tax refunds in 2023 to be included in your 2024 tax submission.

Our accounting section has more information about accounting for startups and how to ensure that you stay on top of local taxes.

Crypto Currency Transactions

The IRS classifies digital assets as property; as such, any transactions made with them are taxable by law.

Cryptocurrency sales attract capital gains taxes, and the asset is taxed on its fair market value on the date it is received.

If you have sold, traded, or disposed of any cryptocurrency during 2023, then you must acknowledge it on Form 1040.

Keep all records of your cryptocurrency or non-fungible token (NFT) transactions, as you'll pay different tax rates on short-term and long-term gains.

You will pay between 10% and 37% tax on short-term capital gains, while long-term gains are taxed between 0% and 20%.

NFTs are handled differently as they are deemed collectibles and may be taxed at a rate of 28% based on the details of each transaction.

Itemized Tax Deductions And Credits

Here's a list of tax deductions and credits that can reduce your taxable income or decrease your estimated tax payments.

Should you be audited, you must have the necessary documents to prove your deduction or your eligibility for a credit.

By using basic accounting principles, you can ensure that you accurately capture all the deductions to which you are entitled.

Ensure that you have documentation to claim the following popular tax deductions and credits:

Medical Expenses

If your medical and dental expenses are more than 7.5% of your adjusted gross income, then most taxpayers can claim the deduction.

Retirement Contributions

Subject to certain rules, contributions to traditional IRAs or self-employed retirement accounts are deductible subject to the various applicable limits.

Property Taxes

Claim escrowed property taxes on Schedule A using Form 1098 from your lender, as this can result in a significant income tax reduction.

Student Expenses

To claim deductions for tuition and fees together with interest paid on student loans, you need Form 1098-T, which details all education transactions.

Form 1098-E includes student loan details that you'll require for the IRS to accept your claim, which you include in your qualified educational expenses records.

Charitable Donations

If you made charitable donations during the year, keep your receipts to prevent the IRS from disallowing your claim.

Any amounts you donate to houses of worship, schools, and other charitable organizations qualify for inclusion under this deduction.

The cash value donated and the value of donated property are deductible, as are any out-of-pocket and travel expenses, which you must keep with other charitable organizations' records.

State And Local Taxes

Both state and local income tax and sales taxes are deductible with an upper limit of $10,000 when taken together with your property taxes.

The IRS has tables that average claimable amounts, but while you don't need to present receipts for sales tax, major purchases should be added.

Childcare Expenses

You can claim childcare costs if you keep a record of the provider's tax ID number, name, address, and all the amounts paid.

If you've adopted a child, then you can claim your adoption costs, including legal or medical expenses as well as transport costs.

School Teachers

School teachers and eligible educators can claim classroom expenses up to an amount of $300 for expenditure on classroom supplies.

Should you and your spouse qualify, you can claim up to $600 per year for classroom supplies when filing jointly.

Taxable Investment Expenses

If you itemize your deductions, then you may be able to deduct the interest you paid on the loan to buy taxable investments.

Home Expenses

Your home mortgage interest and any points you paid are claimable, as are solar panel installations or water heaters for energy-saving home improvements.

Electric Vehicles

Subject to certain rules, you may qualify for a $7,500 credit in terms of Internal Revenue Code Section 30D for new EVs or fuel-cell electric vehicles.

Your vehicle must have a battery capacity of at least 7 kWh, weigh less than 14,000 pounds, and originate from a qualified manufacturer.

For those of you working in the gig economy, remember that you may qualify for gig worker tax deductions that can reduce your tax liability.

Credits

Tax credits provide you with dollar-for-dollar tax cuts that can make a large difference in the amount of tax you eventually pay.

Here are some of the most popular tax credits available for which you must have supporting documents to make your claim:

• The American Opportunity and Lifetime Learning credit is available and is detailed on Form 1098-T.
• A child tax credit is worth as much as $2,000 per child per tax year, while adopted children may make you eligible for additional tax credits.
• Retirement Savings Contributions credit is available if you contribute to a 401(k), a similar employer-sponsored plan, or an IRA.

Just make sure that your tax documents include details supporting each claim and that you keep track of the estimated tax payments you make.

Energy Credits

Energy credits allow for up to $1,200 for energy property costs as well as certain energy-efficient home improvements that you make.

A credit of $2,000 per year is possible for qualified heat pumps or biomass boilers, as well as $600 for central AC or hot water boilers.

Tax Payments

Self-employed individuals or those who earn an income on which federal and state taxes are not withheld make quarterly estimated tax payments.

To avoid overpaying tax, you must include a list of the estimated federal tax payments that you made during the year in your tax documents.

This is added to the tax liabilities that are withheld from your paychecks each week or month and recorded on your W-2 forms.

Include records of your real estate taxes paid as well as personal property taxes such as license fees imposed based on your vehicle value.

Don't forget to include any prior-year refund that may apply to the current year, as well as any amounts that are paid with an extension.

Proof of Losses

There are a variety of different financial losses that qualify as deductible which require documentary proof if they apply to 2023.

You must retain a record of any stock or other type of investment that has no value or which you expect to be valueless.

The documentary evidence must include a full description of the asset as well as the date of purchase and the price that was originally paid.

You can also claim bad debts of a personal nature (non-business), such as money lent to friends from your personal bank accounts that aren't repaid.

We offer plenty of financial tips for working in the gig economy that ensure that you take advantage of tax-saving opportunities.

Summary

While it takes time to collect the information needed to file your tax returns, using a system makes the process much easier and less daunting.

Following the steps we've laid out will ensure you provide the IRS with everything you need to claim your tax deductions and credits.

Should you be audited, this tax prep checklist and the file with your supporting documents will provide everything you need to keep the authorities happy.