Prepping for 2013 Tax Filing

The IRS recently announced that they’d begin processing tax returns on January 30th, 2014. If you’re not ready to meet that aggressive timeline, you can always wait until the April 15th deadline. Whichever date you choose to send your paperwork in and close out the 2013 tax year, you need to be organized and have all your data together. Here are a few tips to make the process easier.

  • Compile your documents. If you’re taking deductions for charitable contributions, energy-efficient home improvements, child care, tuition and other expenses, now’s a good time to start gathering those receipts together. If you can’t find a receipt, call the retailer or organization you gave the money to and see if they can provide a copy.
  • Gather your statements. In January, you’ll start receiving end-of-year statements from your mortgage lender, retirement account custodians and banks. These statements will show important information that may need to be used on your tax forms, including gains, interest payments, distributions, contributions, and more. Get these documents together and match them with the various 1099 statements you will receive in February so that you can verify accuracy. Most 1099-DIV and 1099-R documents are mailed by January 31st, 2014 but the deadline for 1099-B forms is not until February 18th so you may not receive your tax documents for non-retirement brokerage and investment accounts until the end of February.
  • Max out your Traditional and Roth IRA contributions by April 15th, 2014. You have until April 15th to make a 2013 contribution to your Roth* or Traditional IRA. The maximum IRA contributions for 2013 are $5,500 with an added catch-up contribution of $1,000 for people over 50. Don’t forget to tell your IRA custodian the tax year you want the contribution credited to.
  • Make health savings account (HSA) contributions by April 15th, 2014. The balance in your HSA rolls over from year to year and funds withdrawn for non-medical purposes are exempt from the ten percent penalty once you reach age 65, making this an important account to max out annually. Just as with an IRA, you can make a 2013 contribution between now and April 15th, 2014. You must still follow 2013 limits, which are $3,250 for single individuals, $6,450 for families and a catch-up contribution of $1,000 for those over 55 who are not enrolled in Medicare.
  • Schedule your appointment with your tax preparer. Many tax preparers are happy to start booking appointments now, even for March and April, so they can better plan out their busy tax season. Having an appointment on the books also gives you a hard deadline for preparing all of your documents so you aren’t tempted to procrastinate. Just bear in mind that if you have non-retirement brokerage accounts, you may not want to schedule an appointment before the end of February since the deadline for mailing 1099-B forms is not until February 18th.

It’s easy to get overwhelmed by the amount of preparation that goes into an annual tax filing but getting a head start can ease the stress.

*Generally, Roth IRA contributions are not tax deductible, however, you could qualify for the savers credit, which may entitle you to a partial tax credit if you fall within certain income limits. Ask your tax advisor for more information.