Taxes are inevitable. Preparing them, however, doesn't have to be painful.
One way to speed up the process: Gather everything you need before it's time to work on your return.
According to Bob Meighan, vice president of customer advocacy for TurboTax®, it also helps to think about taxes in simple terms.
"Think of it as a financial summary of your year," Meighan says. "The IRS just wants to know how much income you've earned during the year."
Documents you'll need to collect:
- A W-2 from your employer, stating your total wages for the year, federal, state and local taxes paid, Social Security and Medicare withholding. Check with your employer, because you may be able to access yours electronically.
- Bank statements (1099-INT for interest)
- Investment reports (1099-DIV for dividends or 1099-B for proceeds from a broker)
- Property tax bills
- College tuition expenses
- Charitable donation receipts
- Mortgage statements
If you work an additional job, that makes things more complex and you'll also need a detailed record of business expenses. Many veterans, for example, participated in the sharing economy in 2015.
"If you drive for a ride-share company, you have your own business income to report, as well as business expenses, because you're technically self-employed," Meighan advises. "It's the same with people temporarily renting out parts of their house or a bedroom. They become landlords. These filers need to have more detailed records."
If you're running a small business, invest in bookkeeping software that manages and tracks expenses. What's more, a good software program — USAA recommends TurboTax — can walk you through simple to increasingly more complicated returns based on your job and business.
