Preparing for tax day
Use these tips to help you prepare for your appointment
What should you do to prepare for your appointment?
Required documents to keep on file:
- Copies of Drivers License or State IDs
- Social Security Cards
- Proof of Residence for dependents claiming EIC
Income documents:
- Income from jobs: forms W-2 for you and your spouse
- Investment income—various forms 1099 (-INT, -DIV, -B, etc.), K-1s, stock option information
- Income from state and local income tax refunds and/or unemployment: forms 1099-G
- Taxable alimony received
- Business or farming income—profit/loss statement, capital equipment information
- If you use your home for business—home size, office size, home expenses, office expenses
- IRA/pension distributions—forms 1099-R, 8606
- Rental property income/expense—profit/Loss statement, rental property suspended loss information
- Social Security benefits—forms SSA-1099
- Income from sales of property—original cost and cost of improvements, escrow closing statement, cancelled debt information (form 1099-C)
- Prior year installment sale information—forms 6252, principal and Interest collected during the year, SSN and address of payer
- Other miscellaneous income—jury duty, gambling winnings, Medical Savings Account (MSA), scholarships, etc.
(Use our handy IRS document search tool for your documents)
How can I check on my tax refunds? Tax Related Web-sites/phone numbers: IRS www.irs.gov IRS Get Refund Status IRS Inquiry Phone: (800) 829-1040
Other tax documents:
- IRA contributions
- Energy credits
- Student loan interest
- Medical Savings Account (MSA) contributions
- Self-employed health insurance payments
- Keogh, SEP, SIMPLE and other self-employed pension plans
- Alimony paid that is tax deductible
- Educator expenses
- State and local income taxes paid
- Real estate taxes paid
- Personal property taxes—vehicle license fee based on value
- Estimated tax payment made during the year, prior year refund applied to current year, and any amount paid with an extension to file.
- Direct deposit information—routing and account numbers
- Foreign bank account information—location, name of bank, account number, peak value of account during the year
Tax deduction documents:
- Child care costs—provider’s name, address, tax id, and amount paid
- Education costs—forms 1098-T, education expenses
- Adoption costs—SSN of child, legal, medical, and transportation costs
- Home mortgage interest and points you paid—Forms 1098
- Investment interest expense
- Charitable donations—cash amounts and value of donated property, miles driven, and out-of-pocket expenses
- Casualty and theft losses—amount of damage, insurance reimbursements
- Medical and dental expenses
Current Tax rates
Current rates information provided by Tax Foundation
2024 Tax Brackets
Income Tax Brackets and Rates
The 2024 income ceiling for all listed tax brackets and for all filers, adjusted for inflation are listed below. The Seven federal income tax rates for 2024 are... 10% - 12% - 22% - 24% - 32% - 35% - 37% (no changes from 2023). The marginal income tax rate of 37% will apply to taxpayers with taxable income above $609,350 (single filers), and $731,200 is the target for married couples filing jointly...(SEE Table 1)
Table 1. Tax Brackets and Rates, 2024 (Source: IRS)
Standard Deduction & Personal Exemption
2024 has standard deductions for single filers increasing by $750; $1500 for married couples filing jointly. Seniors over the age of 65 are eligible to claim an additional standard deduction of $1,950 for single filers and $1,550 for joint filers. Personal exemptions for 2024 remains at ZERO (this is due to the personal exemption from the Tax Cuts and Jobs Act 2017 )
Table 2. 2024 Standard Deduction and Personal Exemption (Source: IRS)
Alternative Minimum Tax
Created in the 1960s, The Alternative Minimum Tax (AMT) was setup to prevent high-income taxpayers from avoiding the individual income tax. This parallel tax income system requires high-income taxpayers to calculate their tax bill twice: once under the ordinary income tax system and again under the AMT. The taxpayer then needs to pay the higher of the two. More information can be found at IRS.Gov (SEE Table 3).
Table 3. 2024 Alternative Minimum Tax Exemptions (Source:IRS)
2024 keeps the AMT rate at 28%. This rate applies to excess AMTI of $232,600 for all taxpayers ($116,300 for married couples who file separate returns).
The AMT exemptions phase out at 25 cents per dollar earned once a taxpayers AMTI hits a certain threshold. In 2024, the exemption will start phasing out at $609,350 in AMTI for single filers and $1,218,700 for married taxpayers filing jointly (SEE Table 4).
Table 4. 2024 Alternative Minimum Tax Exemption Phaseout Thresholds
Earned Income Tax Credit
The 2024 Maximum Earned Income Tax Credit (EITC) for single and joint filers is $632 (no children) (SEE Table 5). The maximum credit is $4,213 for one child, $6,960 for two children, and $7,830 for three or more children.
Table 5. 2024 Earned Income Tax Credit Parameters
Qualified Business Income Deduction
Within the Tax Cuts and Jobs Act, there is an inclusion of a 20% deduction in 2024 for pass-through businesses with $191,950 of qualified business income for single taxpayers and $383,900 for married taxpayers filing jointly (SEE Table 6).
Table 6. 2024 Qualified Business Income Deduction Thresholds (Source:IRS)
Child Tax Credit
The maximum Child Tax Credit for 2024 is $2,000 per child who qualifies, with no adjustments for inflation. The amount that may be refunded for the Child Tax Credit is adjusted for inflation and increases from $1,600 to $1,700 in 2024.
2024 Annual Exclusion for Gifts
For 2024, the first $18,000 of gifts to any person is excluded from tax. Exclusions are increased to $185,000 from $175,000 for gifts to spouses who're not citizens of the United States.
2024 Capital Gains Tax Rates & Brackets (Long-term Capital Gains)
Capital Gains, long term, are taxed using different rates and brackets compared to standard income.
Table 7. 2024 Capital Gains Tax Rates & Brackets (Source:IRS)
2023 Tax Brackets
Income Tax Brackets and Rates
The 2023 income ceiling for all listed tax brackets and for all filers, adjusted for inflation are listed below. The Seven federal income tax rates for 2023 are... 10% - 12% - 22% - 24% - 32% - 35% - 37% The marginal income tax rate of 37% will apply to taxpayers with taxable income above $539,900 (single filers), and $693,750 is the target for married couples filing jointly...(SEE Table 1)
Table 1. Tax Brackets and Rates, 2023 (Source: IRS)
Standard Deduction and Personal Exemption
2023 has standard deductions for single filers increasing by $900; $1800 for married couples filing jointly. Personal exemptions for 2023 remains at ZERO (this is due to the personal exemption from the Tax Cuts and Jobs Act 2017 )
Table 2. 2023 Standard Deduction and Personal Exemption (Source: IRS)
Alternative Minimum Tax
Created in the 1960s, The Alternative Minimum Tax (AMT) was setup to prevent high-income taxpayers from avoiding the individual income tax. This parallel tax income system requires high-income taxpayers to calculate their tax bill twice: once under the ordinary income tax system and again under the AMT. The taxpayer then needs to pay the higher of the two. More information can be found at IRS.Gov (SEE Table 3).
Table 3. 2023 Alternative Minimum Tax Exemptions (Source:IRS)
2023 still sees the AMT rate at 28%. This rate applies to excess AMTI of $220,700 for all taxpayers ($110,350 for married couples who file separate returns).
The AMT exemptions phase out at 25 cents per dollar earned once a taxpayers AMTI hits a certain threshold. In 2023, the exemption will start phasing out at $578,150 in AMTI for single filers and $1,156,300 for married taxpayers filing jointly (SEE Table 4).
Table 4. 2023 Alternative Minimum Tax Exemption Phaseout Thresholds
Earned Income Tax Credit
The 2023 Maximum Earned Income Tax Credit (EITC) for single and joint filers is $560 (no children) (SEE Table 5). The maximum credit is $3,995 for one child, $6,604 for two children, and $7,430 for three or more children. Increases are nominal.
Table 5. 2023 Earned Income Tax Credit Parameters
Qualified Business Income Deduction
Within the Tax Cuts and Jobs Act, there is an inclusion of a 20 percent deduction in 2023 for pass-through businesses with $182,100 of qualified business income for single taxpayers and $364,200 for married taxpayers filing jointly (SEE Table 6).
Table 6. 2023 Qualified Business Income Deduction Thresholds (Source:IRS)
Child Tax Credit
The maximum Child Tax Credit for 2023 is $2,000 per child who qualifies, with no adjustments for inflation. The amount that may be refunded for the Child Tax Credit is adjusted for inflation and increases from $1,500 to $1,600 in 2023.
2023 Annual Exclusion for Gifts
For 2023, the first $17,000 of gifts to any person is excluded from tax. Exclusions are increased to $175,000 from $164,000 in 2023 for gifts to spouses who are not citizens of the United States.
2023 Capital Gains Tax Rates & Brackets (Long-term Capital Gains)
Capital Gains, long term, are taxed using different rates and brackets compared to standard income.
Table 7. 2023 Capital Gains Tax Rates & Brackets (Source:IRS)
Tax Records Retention
Tax record retention times
WHEN IN DOUBT, DON'T THROW IT OUT
Federal law requires you to maintain copies of your tax returns and supporting documents for three years. This is called the “three-year law” and leads many people to believe they're safe provided they retain their documents for this period of time. Even if the original records are provided only on paper, they can be scanned and converted to a digital format. Once the documents are in electronic form, taxpayers can download them to a backup storage device, such as an external hard drive, or burn them onto a CD or DVD (don't forget to label it). Create a Backup Set of Records and Store Them Electronically. Keeping a backup set of records — including, for example, bank statements, tax returns, insurance policies, etc. — is easier than ever now that many financial institutions provide statements and documents electronically, and much financial information is available on the Internet. You might also consider online backup, which is the only way to ensure that data is fully protected. With online backup, files are stored in another region of the country, so that if a hurricane or other natural disaster occurs, documents remain safe.
| Caution: Identity theft is a serious threat in today's world, and it is important to take every precaution to avoid it. After it is no longer necessary to retain your tax records, financial statements, or any other documents with your personal information, you should dispose of these records by shredding them and not disposing of them by merely throwing them away in the trash. |
However, if the IRS believes you have significantly underreported your income (by 25 percent or more), or believes there may be indication of fraud, it may go back six years in an audit. To be safe, use the following guidelines.
Business Documents To Keep For One Year
- Correspondence with Customers and Vendors
- Duplicate Deposit Slips
- Purchase Orders (other than Purchasing Department copy)
- Receiving Sheets
- Requisitions
- Stenographer's Notebooks
- Stockroom Withdrawal Forms
Business Documents To Keep For Three Years
- Employee Personnel Records (after termination)
- Employment Applications
- Expired Insurance Policies
- General Correspondence
- Internal Audit Reports
- Internal Reports
- Petty Cash Vouchers
- Physical Inventory Tags
- Savings Bond Registration Records of Employees
- Time Cards For Hourly Employees
Business Documents To Keep For Six Years
- Accident Reports, Claims
- Accounts Payable Ledgers and Schedules
- Accounts Receivable Ledgers and Schedules
- Bank Statements and Reconciliations
- Cancelled Checks
- Cancelled Stock and Bond Certificates
- Employment Tax Records
- Expense Analysis and Expense Distribution Schedules
- Expired Contracts, Leases
- Expired Option Records
- Inventories of Products, Materials, Supplies
- Invoices to Customers
- Notes Receivable Ledgers, Schedules
- Payroll Records and Summaries, including payment to pensioners
- Plant Cost Ledgers
- Purchasing Department Copies of Purchase Orders
- Sales Records
- Subsidiary Ledgers
- Time Books
- Travel and Entertainment Records
- Vouchers for Payments to Vendors, Employees, etc.
- Voucher Register, Schedules
Special Circumstances
- Car Records (keep until the car is sold)
- Credit Card Receipts (keep with your credit card statement)
- Insurance Policies (keep for the life of the policy)
- Mortgages / Deeds / Leases (keep 6 years beyond the agreement)
- Pay Stubs (keep until reconciled with your W-2)
- Property Records / improvement receipts (keep until property sold)
- Sales Receipts (keep for life of the warranty)
- Stock and Bond Records (keep for 6 years beyond selling)
- Warranties and Instructions (keep for the life of the product)
- Other Bills (keep until payment is verified on the next bill)
- Depreciation Schedules and Other Capital Asset Records (keep for 3 years after the tax life of the asset)
Personal Documents To Keep For One Year
- Bank Statements
- Paycheck Stubs (reconcile with W-2)
- Canceled checks
- Monthly and quarterly mutual fund and retirement contribution statements (reconcile with year end statement)
Personal Documents To Keep For Three Years
- Credit Card Statements
- Medical Bills (in case of insurance disputes)
- Utility Records
- Expired Insurance Policies
Personal Documents To Keep For Six Years
- Supporting Documents For Tax Returns
- Accident Reports and Claims
- Medical Bills (if tax-related)
- Property Records / Improvement Receipts
- Sales Receipts
- Wage Garnishments
- Other Tax-Related Bills
Personal Records To Keep Forever
- CPA Audit Reports
- Legal Records
- Important Correspondence
- Income Tax Returns
- Income Tax Payment Checks
- Investment Trade Confirmations
- Retirement and Pension Records
Business Records To Keep Forever While federal guidelines do not require you to keep tax records “forever,” in many cases there will be other reasons you'll want to retain these documents indefinitely.
- Audit Reports from CPAs/Accountants
- Cancelled Checks for Important Payments (especially tax payments)
- Cash Books, Charts of Accounts
- Contracts, Leases Currently in Effect
- Corporate Documents (incorporation, charter, by-laws, etc.)
- Documents substantiating fixed asset additions
- Deeds
- Depreciation Schedules
- Financial Statements (Year End)
- General and Private Ledgers, Year End Trial Balances
- Insurance Records, Current Accident Reports, Claims, Policies
- Investment Trade Confirmations
- IRS Revenue Agents' Reports
- Journals
- Legal Records, Correspondence and Other Important Matters
- Minute Books of Directors and Stockholders
- Mortgages, Bills of Sale
- Property Appraisals by Outside Appraisers
- Property Records
- Retirement and Pension Records
- Tax Returns and Worksheets
- Trademark and Patent Registrations
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