Free Tax Prep Checklist: 7 Things to do Before You File

Tax Preparation Checklist

Tax time. It’s an annual season that many of us dread all year long. Unfortunately, our tax code is unnecessarily complex. And things can get even more complicated if you have a side hustle or own a business.

You can make your taxes less stressful by being prepared with a tax prep checklist. Before you file your taxes, you’ll want to consider any life changes or tax law changes that took place last year that may affect your tax bill. You may also want to make an additional contribution to your retirement account. Finally, you’ll need to gather your tax-related documents before choosing your tax preparer.

In this tax prep guide, we’ll break down each step of the tax return process into more detail.

7 Things to Do Before You File Your Taxes

Ready to make life easier on yourself at tax time? These seven tax prep steps could help you minimize your anxiety and maximize your deductions and credits.

1. Find a Copy of Last Year’s Return

There are several reasons why you’ll want to start the tax prep process by finding your previous year’s tax return. First, this can help refresh your memory on the forms you’ll need and the tax deductions or credits you qualified for last year.

Also, if you want to self-prepare your taxes and you plan to e-file, you’ll need to validate your return by entering your Adjusted Gross Income (AGI) from last year’s return.

If you used an online tax preparer, they’d have an electronic copy of last year’s return available for you to download and review. Many tax software providers will automatically input your prior year’s AGI when you begin your new return.

If you can’t get a copy of last year’s tax return from your tax preparer, you can order a transcript from the IRS for free. However, if you want to order an actual copy of your return from the IRS, you’ll be charged a fee of $50 per copy.

2. Make Sure Your Filing Status Hasn’t Changed

Your filing status affects your tax bracket income limits and could also impact the deductions and credits you qualify for. So you’ll want to make sure you choose the correct status for this year’s return to avoid making mistakes that could get you into trouble with the IRS.

Here are the five filing statuses:

  • Single
  • Married filing jointly
  • Married filing separately
  • Head of household
  • Qualifying widow(er) with dependent child

Your marital status mainly influences your filing status and whether or not you have any dependents living in your home. If you were married last year, your filing status will most likely have changed.

Those who were divorced or widowed last year may also have a filing status change. If your divorce was finalized before December 31 of last year, you’ll no longer qualify for the married filing jointly or married filing statuses separately.

If you became a widow or widower last year and have a dependent child living at home, you can choose the Qualifying widow(er) with dependent child status. This filing status allows you to keep the married filing jointly status benefits for an additional two years.

Finally, if you’re a single person who had a baby last year, your filing status will most likely change to Head of Household. Sound confusing? Don’t worry. If you use online tax software like H&R Block, they’ll usually ask you a series of questions to help you decide which filing status is right for you.

3. Familiarize Yourself With Recent Tax Law Changes

Here are a few important tweaks that could affect you.

  • Higher standard deduction: The standard deduction for single filers rose to $12,9500 and for married filing jointly taxpayers to $25,900
  • Inflation Adjustments In addition to the higher standard deduction, the IRS made several other changes to tax limits to keep up with inflation, including changes to retirement plan contribution limits, tax bracket income limits, the Alternative Minimum Tax exemption amount, and more. See the recent inflation adjustments.

4. Consider Recent Life Events That Could Affect Your Taxes

We already mentioned earlier that getting married or having kids can have a big effect on your tax bill as both events could change your filing status.

But having children could change your taxes in multiple ways. For instance, you may now qualify for the Child Tax Credit or the Child and Dependent Care Credit.

Another event that can have a big impact on your tax return is buying a home. If you purchased a house last year, there are a few deductions that you may be able to take advantage of.

Numerous other life events could also change your taxes, like going to college or receiving an inheritance. Thankfully, most top tax software providers will ask plenty of questions to help you uncover the life events from last year that may affect your taxes.

5. Make an Extra Contribution to Your Retirement Account

Most people know that contributing to a pre-tax retirement account like a Traditional IRA or a 401k reduces their taxable income. But one thing you may not know is that you have until April 15th (or the tax filing deadline) of the following year to make a deductible contribution.

Let’s say, for example, that you contributed $4,000 to your IRA last year. You have until July 15th (or the tax deadline) that you’d still be able to contribute the remainder of the limit to your IRA for the last tax year. And you’d still have a full contribution limit for this next tax year.

So if you didn’t max out your IRA, 401(k), or self-employed retirement plan last year, you may want to make an additional contribution before you file your tax return.

6. Gather Your Necessary Documents

Ok, now that you’ve thought through your filing status and key life changes, it’s time to start collecting your tax documents. Below, you’ll find a quick list of things you may need to file your tax return.

This list will work whether you’re using a CPA or other tax professional, or whether you are doing it yourself through a service like TurboTax.

While it might seem like the IRS wants everything from your blood type to your first-born, there are generally only four types of information you’ll need to gather to do your taxes:

Personal and Dependent Information

This is stuff like your family and dependents’ Social Security number or tax ID numbers. You’ll also want to have your bank account and routing number to be able to have your refund direct deposited.

Income

This is pretty simple if you and your spouse work a traditional job and receive a W-2 each year. In fact, if you use an online tax service, you may be able to automatically import your W-2 by plugging in your Employer Identification Number (EIN) or even by snapping a picture of it.

But things get much more complicated if you earn freelance income, rental income, retirement income, investment or dividend income, or if you received unemployment compensation in 2018. In that case, you may have several 1099s that you’ll need to collect.

Deductions

Here’s where things can get really complex, especially if you’re the proud owner of a shoebox full of unsorted receipts. Even if you take the standard deduction and don’t itemize, there are still some things that can affect your tax burden that you’ll need documentation for.

A short list of that information includes:

  • IRA contribution information
  • Education information (tuition paid, student loan interest paid, etc)
  • Home mortgage interest paid
  • Medical expenses
  • Job search and moving related expenses
  • Charitable donations

Related: Commonly Overlooked Tax Deductions

Taxes Paid

If you pay quarterly estimated taxes, you’ll need to provide documentation of your payments. Also, if you owe state and/or local income tax (other than what is withheld from your paycheck), or you have paid vehicle sales taxes, you might need to have that information available for your filing.

7. Choose Your Tax Preparer

If you have a simple tax situation, you may be able to go full DIY by filling out a paper return yourself or using the IRS free e-file product. Remember that all you’ll get when you go this route are the fillable forms. The IRS isn’t in the business of trying to help you maximize your potential deductions and credits.

Alternatively, you could hire a local tax pro like a CPA or an enrolled agent to handle your taxes. This could be a good option if you own a large business or are a high-net-worth individual.

Most of us, however, fall somewhere between these two extremes. We don’t necessarily need the complete CPA treatment, but we feel intimidated by going 100% DIY.

If that’s you, tax software providers strike a nice balance by using technology to optimize your deductions and credits. Plus, you can pay a little extra to get help from a human tax professional when you need it.

Each year online tax preparers seem to offer more assistance and support options for those who need it.

The Bottom Line

Once you get in the habit of immediately putting necessary paperwork in one of these three folders throughout the year, you’ll find that sitting down to do your taxes–either on your own, with the help of an online tax prep service, or in a CPA’s office–is almost a pleasant experience.

With organized paperwork, you can go down the Tax Prep checklist quickly and efficiently and move on to the next thing. Because ultimately, who wants to spend more time than they have to on filing their taxes?

Avatar About Philip Taylor, CPA

Philip Taylor, aka "PT", is a CPA, blogger, podcaster, husband, and father of three. PT is also the founder and CEO of the personal finance industry conference and trade show, FinCon.

He created Part-Time Money® back in 2007 to share his advice on money, hold himself accountable (while paying off over $75k in debt), and to meet others passionate about moving toward financial independence.

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  1. Avatar Michael Gellings says

    @Amy Spairana How much does H&R block charge for a home business?

  2. Avatar Amy Spairana says

    I use H&R block online. So easy and the check lists they ask you in the beginning help to ensure all your bases are covered, even for a small home business owner like me.

  3. Avatar Lauren Deckert says

    Do my own!

  4. Thanks, this is a useful resource.

    It’s funny how perceptions can lead to tax-time-torture. My wife and I file jointly. We both sit in front of the computer and prepare our return together. It’s my job to collate all the infrmation, so that when we are putting it together, it’s all at our finger tips.

    My understanding of having the information, is being able to find it in under a minute. Like fnding the site, or the statement. Her understanding is that all the information is sitting in a neat binder directly in front of us. She thinks we are totally disorganised, I think we are totally on top of it.

    I love taxes. Ha!

  5. Avatar Philip Taylor says

    @Hunter – Wow. That sounds like Mrs PT and I. Except she’s not even sitting there with me. 🙂

    I definitely use the find it when you need it method too. Still checklists are good for assurance that the software or CPA didn’t miss anything.