Chocolate, Lions, and . . . Taxes

Getting ready to file your taxes? Definitely read this first!

Presented by Samantha Endlich

February may be best known as the month when Cupid takes center stage and early March for when the lion comes roaring in, but this time of year is also ideal for getting your tax documentation in order. Following a few simple tips now can ensure that you don’t miss out on valuable deductions and tax credits because you can’t locate required documentation later.


The key to getting organized is ensuring that you have all of the documentation you need when it’s time to file. This will ease the process for you or for your tax preparer.

Here are a few of the most common forms that should have arrived in your mailbox by early March:

Form W-2: reporting wages, salary, tips, commissions, and other compensation

Forms 1099-DIV and 1099-INT Tax: reporting dividends and interest

Forms for reporting other income, including:

Form 1099-R: reporting distributions from annuities, profit-sharing plans, retirement plans, IRAs, and pensions

Form 1099-SS: reporting social security income

Schedule K-1: reporting income from partnerships, estates, or trusts

Form 1098: reporting mortgage interest paid

Form 1098-E and 1098-T: reporting student loan interest and qualified higher education expenses paid

If you haven’t received a form that you had expected, contact your employer, the payor, or the institution responsible for the reporting. You may be able to obtain the information from other sources, including through an online customer account. Be proactive and check on missing documents as soon as possible, as you don’t want to be scrambling for paperwork when the filing deadline looms.

Deductions and Credits

In addition to compiling the standard tax filing documentation, many taxpayers need to organize receipts or material that demonstrates their eligibility to qualify for deductions and credits. Use the following tips to smooth the process:

Organize throughout the year.

Buy an expandable binder and organize it according to common tax categories (e.g., wages, interest and dividends, other income). Make a general deductions folder to file receipts for expenses that may become tax deductions (e.g., property taxes) and a miscellaneous folder for items you’re not sure about.

Put the expandable binder in an easy-to-reach spot so that you can literally walk by and drop paperwork in as it arrives or as you come across it. Even if you ultimately don’t use these documents or receipts, you’ll have them at your fingertips when the time to decide comes. Remember: It’s easier to toss than it is to hunt around for a missing receipt.

Put together a checklist.

If you are working with a tax advisor, he or she will likely provide a checklist to help you get organized. Use this list, or make your own. Include items that you have addressed in previous years or add new items. The list will become a handy resource to review annually when it’s time to gather what you need.

It’s early enough to start fresh for this year. A new organizational system and a proactive approach to finding and filing documentation shouldn’t take long. You’ll still have time to taste February’s still-delicious leftoverc hocolate, as March comes roaring in.

Commonwealth Financial Network® does not provide tax or legal advice.

# # #

Samantha Endlich is a financial adviser practicing at Prosperity Financial Services Group, 1 Reserve Road, Danbury, Connecticut 06810. A graduate of Cornell University, she offers securities and advisory services as a registered representative of Commonwealth Financial Network®, a member firm of FINRA/SIPC (and a Registered Investment Adviser). She can be reached at 203-791-3995 or at sendlich@prosperityfsg.com.

© 2011 Commonwealth Financial Network®

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