Just when you thought it was safe to open your filing cabinet again, it hits you…tax season is here! Now is the time to start going through your paperwork and gathering the documents needed for the preparation of your tax returns. Taking a few moments to ascertain that all of your documentation is complete and accurate could save you a lot of time and money later on.

Since some of these items can result in you having to take actions that could take weeks to resolve, you should try to get started on them as soon as possible.

Check your W-2s, 1099s, etc… for accuracy. January 31st is the deadline for issuers to get your year-end tax statements to you such as W-2s, 1099s, etc…. As you receive them in the mail, check them for errors. Errors such as transposed numbers in amounts paid/received and Social Security numbers do occur, probably more often than you would think.

If you discover an error, contact the issuer immediately and request that a corrected version of the form be prepared and re-issued to both you and the IRS as soon as possible. Although it may seem easier to just ignore the error and indicate the correct amount on your tax return, this could result in a bigger headache down the road. The IRS has an automated program that matches amounts claimed on a person’s tax return to those amounts reported by the companies and financial institutions. If there is a discrepancy, the IRS will notify you, asking you to explain the discrepancy. Failure to respond quickly and accurately with the proper documentation to this notice may result in you paying additional taxes, penalties and interest.

Obtain Social Security numbers for dependents. In order to claim an exemption for your dependents, they must have valid identification numbers. The tax law requires a Social Security number (SSN) for each person for which an exemption is being claimed on your return (including yourself, your spouse and every dependent, including infants born on or before December 31st). If you do not list the dependent's SSN when required or if you list an incorrect SSN, the exemption may be disallowed.

Contact your local Social Security Administration office to apply for a Social Security number using Form SS-5. Once you have completed the form and provided proper documentation (such as a certified birth certificate), you should receive the number in 2-3 weeks. If you do not have a required SSN by the filing due date, you will need to for an extension of time to file your return.

If you adopted a child through an authorized placement agency, you must use Form W-7A to get an adoption taxpayer identification number (ATIN) for the child from the IRS.

Gather receipts and other documentation for charitable contributions. For most of your small cash charitable contributions, you need only keep a canceled check or receipt to document your contribution. If you made a charitable cash gift of $250 or more last year, though, you’ll need to obtain a written acknowledgement from the charity containing very specific information. Although not required to be filed with the return, this acknowledgment needs to be obtained before you file your return; failure to do so may result in the disallowance of the deduction if your return is audited. This written proof of contribution is required even if you have a canceled check.

Gather securities transaction documents. If you had security transactions during the year, you will need to collect the information necessary to compute the gain or loss on the transactions. This information will include records of purchases and sales, including commissions and other selling charges. Securities that were gifted to you, that you inherited, or that you bought a very long time ago (especially mutual funds) may cause you to have to do some legwork to track down the relevant paperwork to document your cost basis in the asset.

As always, if you have any questions, please contact the office for additional assistance.