What type of income information should be gathered prior to meeting with your accountant for preparation of your individual income tax return?

You should certainly bring a copy of your prior year tax return if meeting with a new accountant. You will also need to bring documents related to your income earned and potential deductions. This could include the following:

• Wage Statement – Form W-2
• Forms 1099 for interest, dividends or retirement income
• Social security income Form SSA-1099
• Income from pass-thru entities
• Rental property income and expenses
• Unemployment income

What type of deduction information should be gathered prior to meeting with your accountant for preparation of your individual income tax return?

• Mortgage interest
• Investment interest
• Real estate taxes
• Medical expenses – Subject to 7.5% threshold
• Charitable contributions
• Estimated tax payments

What type of information should be gathered prior to meeting with your accountant for preparation of your business income tax return?

You should certainly bring a copy of your prior year tax return if meeting with a new accountant. You will also need to bring documents related to the income earned and expense payments. This could include the following:

• Working Trial Balance
• General Ledger – Review prior to meeting to make sure all income and expense items are properly categorized.
• Fixed asset addition and deletions
• Year-end bank statement and reconciliation
• Statement or document reflecting proper yearend balance for any bank loans.
• List of any ownership changes

What are the current year tax return filing due dates?

The IRS anticipated 2022 tax return filing dates as follows:

• Individual – April 18, 2023
• Partnership – March 15, 2023
• S Corporation – March 15, 2023
• C Corporation – April 18, 2023
• Trust and Estate – April 18, 2023

What is the current year standard deduction and personal exemption amounts?

Standard Deduction:

• Single: $13,850
• Married Taxpayers Filing Jointly: $27,700

For more information, read our Federal Taxation of Individuals in 2023.

Form W-2 includes wage information. What are some of the items to watch for and other information reported on Form W-2?

• Difference in Box 1 and Box 3 – Box 1 is subject to income tax. Pre-Tax items such as Section 125 health insurance or retirement contributions not taxable and thus not included in Box 1 but will be included in Box 3.
• Over withholding of Social Security taxes (Box 4). May occur when an individual has more than one job and receives more than one Form W-2. Any excess social security withheld will be reflected on individual income tax return as a payment and refunded as appropriate.
• Social security limit for 2023 is $160,200 (up from $147,000 in 2022). No withholding required in excess of limit.
• Medicare wages – No limit
• What is Box 14? Other – Employers generally use Box 14 to provide other information to employees. Generally, the amount in Box 14 is for informational purposes only. May include items such as health insurance payments to pre-tax.

Forms 1099 report interest, dividends, capital gains and losses and other investment type information. What should I review when I receive copies of my Forms 1099?

• Information reported on Forms 1099 should be properly categorized by broker before you receive it. However, a “Corrected” Form 1099 may be received. If so, check the difference and see if you need to file an amended income tax return.
• Verify that each capital gain/loss transaction has a cost basis associated with the sale. If broker does not have information, the transaction will be listed with a “zero” cost basis.

Schedules K-1 report income, deductions and other information related to a Partner’s investment. What should I review when I receive copies of my Schedules K-1?

• Verify that your Social Security Number is correct.
• Verify that your ownership percentage is correct.
• If investment is located in multi-states, verify that you receive a breakdown of the income & deductions related to each state.
• Verify that the capital account properly reflects any contributions made or distributions received from the investment.

We all like to give to charities. What kind of support will we need in order to deduct the charitable donations on our individual income tax return?

• With any charitable contribution it is a good idea to keep copy of check or other monetary support.
• May receive a letter from charity as well.
• Can only deduct a contribution of $250 or more if you have written acknowledgment from charity. Written acknowledgment must include the following:
  • Name of charity
  • Amount of cash contribution or description of non-cash contribution
  • Statement that no goods or services were provided.
  • If goods or services were provided, a good faith estimate of the value.

Can a taxpayer still contribute their required minimum distribution from an individual retirement account to charity and not recognize the income?

• Individuals aged 70 ½ and older are allowed to make a tax-free distribution from IRA’s to a qualified charitable organization.
• Amount is capped at $100,000.
• Retirement amount not included in income but also receive no charitable donation.

Any other suggestions for us when preparing for and meeting with our accountant.

• Gather all necessary tax information prior to meeting. Start and Stop on tax preparation is not good.
• Gather tax information as quickly as possible. Everyone tries to bring in their information near the deadline.
• Be open and honest with your accountant. They are trying to minimize your taxes and need to know certain tax related information.
• Communication is the key. Working well with each other can hopefully lower tax burden.

LBMC’s team of high net wealth advisors have the experience and dedication to simplify your household finances. We believe in taking a coordinated, holistic approach to wealth management and individual finances. We are skilled in handling complex tax issues and situations and our fees reflect that. If you are interested in learning more, contact us.

Content provided by LBMC tax professional Ben Alexander.

LBMC tax tips are provided as an informational and educational service for clients and friends of the firm. The communication is high-level and should not be considered as legal or tax advice to take any specific action. Individuals should consult with their personal tax or legal advisors before making any tax or legal-related decisions. In addition, the information and data presented are based on sources believed to be reliable, but we do not guarantee their accuracy or completeness. The information is current as of the date indicated and is subject to change without notice.