It’s almost that time already. 2016 is behind us, and now the document-gathering begins. By the end of this month, you should start receiving your various year-end tax documents (1099s, W-2s, 1098s, etc.). If the envelope says “Important Tax Documents,” do NOT throw it out (you’d be surprised that people still do…)! A few things to note about this filing season:
- The IRS doesn’t start accepting returns until at least January 23. Just because they’re delayed doesn’t mean that you should delay in getting your documents in order. Use this time to continue looking for possible deductions, receipts, etc.
- If your refund includes tax credits via the Earned Income Tax Credit or Additional Child Tax Credit, the IRS won’t even begin issuing those refunds until at least the middle of February. That is to allow time for additional due diligence and ID verification, as those items are both hotbeds for fraud. If you’re counting on those refunds, make sure you budget accordingly. Some tax preparation services will issue “Refund Anticipation Loans” or RALs, but there are fees involved.
- If you deduct your vehicle expenses, make sure you have a mileage log to back up your deduction. The IRS can and will disallow your deduction without a log.
- If you paid labor or rents of $600 or more in 2016 and plan to deduct them as expenses, make sure you issue the recipient a From 1099 no later than January 31, 2017. Failure to do so will result in penalties and disallowance of your deduction.
- If you’re deducting Travel and Entertainment expenses, make sure you have documentation of the business nature of the trip.