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Your Tax Document Checklist: The No-Stress Guide To Filing Your Taxes, Part 1

Use our free federal tax document checklist to help you get organized for your tax return.

This Website is all about taking confusing, boring topics and presenting them as clearly as possible. And few topics are more confusing and boring than taxes.

So whether taxes simply fail to excite you or flat out freak you out, we’re going to try to make this tax season a bit more bearable. Here’s the first part of Money Under 30′s “No-Stress Guide to Filing Your Taxes”, a six-article series first published in 2012. We cover:

  1. Your tax document checklist: A guide to get you started
  2. Choosing the best method to file your return
  3. Tax software: When to use and how to choose
  4. Tax schedules (itemizing, capital gains, business income, etc.)
  5. Don’t miss…a credit and deduction checklist
  6. Special situations (audit avoidance, extentions, payment plans, and estimated payments)

I hope the series is helpful. To kick it all off, here’s Amber with a checklist of how to get organized before you begin your return—perfect to grab in late January as documents like W2s start filling your mailbox. (You can download the PDF version of the checklist shown above to print out and place with your documents.

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Taxes seem scary.

But for those of us who are just starting out, filing your taxes is usually a pretty simple task.

Shelling out a couple hundred dollars (or more) each year to get your taxes done by someone else may seem like an easy choice, but it’s not always necessary. If you’re young, single, and not yet a homeowner, doing your taxes on your own is easy. And for almost everybody else, tax software like TurboTax can walk you through your taxes step by step. And, if your taxes are simple, filing a federal return with TurboTax is even free.

We’ll help you decide how to file your taxes next time. Today we’re going to look at what forms you’ll need to collect. Before we get started, let me share a couple basics tips to get you started (and, hopefully, ease your mind):

  1. Each form and every single line on every form comes with step-by-step instructions.
  2. These instructions are in one of two places: on the form itself or in a separate document called “XX Form Instructions”.
  3. Learn to love the IRS website. It contains answer to every question you could ever have, so you’re never alone.  They also have hotline numbers, online chat, and e-mail available. They even have a tool called the Interactive Tax Assistant that learns about your tax situation and helps you find answers to your questions.

TAX FORM CHECKLIST

Every tax situation requires different forms. But if you’re just starting out (e.g. you’re working your first job, don’t own a home, and have minimal investments), the number of forms you need is minimal.

Here’s a quick guide to which IRS forms and/or personal documentation you’ll need for the most common income situations:

If you have one or more employers…

If you work for someone else—meaning, employment and income taxes are deducted from your paychecks—you will need at least these two forms:

  • W-2. Your employer(s) will mail these forms to your house no later than January 31st.
  • 1040*. Depending on the complexity of your taxes, there are three 1040 forms to choose from: 1040-EZ, 1040A, or the original 1040. The different types of 1040 forms are explained below.

If you earn any money on your own (from freelancing/self-employment)…

If you worked for yourself at all (full-time or on the side), you will need a few more forms to fill out:

    • 1099. You should receive one 1099 from every company or person you earned income from during the year, if it’s greater than $600.  (Even if it’s not greater than $600, you still have to report the income.) Generally, this will be a 1099-MISC. These will be included as income earned on your Schedule C form.
    • Schedule C*. This is the form where you’ll determine whether you and/or your business earned a profit or suffered a loss during the year. No matter if you earned a profit or suffered a loss, this will be added or subtracted from your overall income on your 1040 form. If you earned a profit, you’ll need to pay employment taxes (like FICA, MediCare, Social Security, etc.) because an employer was not deducting those taxes from your paychecks…you were your own employer.
    • Schedule SE*. If you earned a profit, this form will determine the amount of self-employment taxes you’ll need to pay. In general, you can deduct half of this amount from your total income (line 27 on your 1040 form).
    • 1040 Form*.

If you were unemployed …

  • 1099G.  Unemployment compensation is included in your taxable income, so you must include it in your tax return. You’ll generally receive a 1099G form from the state that paid you unemployment compensation.
  • 1040 Form*.

If you paid student loan or mortgage interest …

  • 1098. Your student loan or mortgage lender(s) will mail you 1098 forms showing how much interest you paid on your loans in the tax year. This interest could potentially be tax deductible.

If you earned interest from bank accounts or investments …

  • 1099-INT. Your bank or investment company will send you these forms for any interest paid to you in cash. Interest income must be reported on your return.

*You only need these forms if you plan on doing your own taxes without software. Other documents you need either way.

EXPLANATION OF THE DIFFERENT 1040 FORMS

Now that you know how to report the income you earned throughout the year, you’ll need to decide which 1040 form to use. Remember, there are three to choose from, the most simple being the 1040EZ (catchy name, huh?) and the most complex being the original 1040 form. The 1040A is right in between both in terms of complexity.

Here’s how to decide which form to use:

1040EZ Form

I was able to file this form during all the years I was in school (through college) because the only income I needed to report to the IRS was simple income I received from various part-time employers. If you’re just starting out, try to use this form if you can. It makes filing your taxes very simple. Here are the requirements:

    • Taxable income less than $100,000
    • No dependants
    • Less than 65 years of age
    • Single or Married Filing Jointly status
    • Interest income less than $1,500

1040A Form

This becomes a popular form for many recent college graduates because this form allows you to deduct student loan interest. If your taxes are still fairly simple but you need to deduct student loan interest (or education expenses, IRA contributions, or higher education expenses), you might be able to use this form.

Additionally, if you own a home, you probably will not be able to use this form since you cannot itemize (e.g. deduct mortgage interest expenses) when using this form.

  • Taxable income less than $100,000
  • You take the standard deduction (do not itemize)
  • Only certain tax credits are allowed

1040 Form

If all else fails, you’ll need to file a 1040 Form. The older you get, the more likely you are to file a 1040 Form instead of the A or EZ versions.

Even if you qualify for the A or EZ versions of the form, you can still use the regular 1040 if that’s what you feel comfortable with.

Remember, no matter which 1040 form you decide to use, every taxpayer must submit a 1040 form to file their tax return. It is the head honcho of tax return documents, so make sure you get familiar with how it works.

Questions? What questions do you have about which forms you’ll need to file your tax return? Let us know in a comment!

(Disclaimer: The tax situations here are all explained at a high level. If your situation is more complex, you may need to file additional forms or seek professional guidance to begin. Tax software like TurboTax and their available help lines may be a place to start for less than hiring an accountant. )

Want to print it? Download the PDF checklist here.

Next in the No-Stress Guide to Filing Your Taxes: Choosing The Best Method to Do Your Taxes.

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About Amber Gilstrap

Amber is a twenty-something CPA from Kansas City, Missouri who loves writing, working out, and---of course---finding fresh ideas for saving money. Follow her on twitter @ambergilstrap.

Comments

  1. Once again, MU30 comes through with an awesome post at the perfect time. I was JUST talking to my mom (also my accountant) about these exact same topics because I’m going to try to do my own tax return this year (Yikes!) Can’t wait for the posts in the coming weeks!

  2. Thanks for the great post Amber! I have a full-time job, so I know I’ll have to fill out a 1040 this year. However, I also started doing some consulting work on the side, and I’m a little confused on how to file the that freelance work. Do I have to file both a Schedule C and SE or just one of the two? Thanks again!

  3. Who needs to hire a financial planner….when you have this sweet checklist?

  4. Amber,

    I don’t have anything to add, but I just wanted to say thank you for putting this together. I can only image the time it took to break down all the info to a nice, clean, readible post.

    Best,

    AG

  5. My wife and I just started taxes this morning. Thanks for the information!

  6. What a great checklist! Thanks for sharing! I definitely need to get started on my taxes.

  7. What about people who paid taxes in a foreign country?

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