1099-B The Toughest Tax Form

This is the form where brokers report to you and the IRS the sales of stock , bonds and other investments. Basis in your investments is also reported for most of the transactions now. Why is the form so tough? It comes late in the tax season, mid February and beyond,  and is subject to revision. It can be hundreds of pages long for those that are into buying and selling frequently. You have to watch for wash sales and other basis adjustments when reporting the sales. Sales have to be divided between short and long term and covered and noncovered. Covered means the basis was reported to the IRS. Compensation basis has to be added back to the stock basis in the case of employees selling their own company stock obtained with nonqualified stock options.

Why Should I Fill Out the Tax Organizer?

I provide you a tax organizer with the prior year's amounts filled in for guidance and a list of questions designed to bring up tax issues that need to be addressed. Why should you help me help you by preparing the organizer? In short this allows you to maximize your deductions and minimize your problems by efficiently considering all of the amounts and issues that go into a tax return in an organized way. I think it can save you time and money. You also can make your tax preparer very happy.

Donation Acknowledgement Letters

To support a cash donation of $250 or more the IRS requires you to have an acknowledgement (ack) letter from the charity which indicates the total amount of the contribution less the fair market value of anything you received back from the charity like a dinner or gift. All charities are required to give you such a letter so now is the time to request one for a 2015 donation if you don't have it. If you get audited 3 years from now and don't have the ack letter, the deduction will be denied. The IRS will still deny the deduction even if you get an ack letter at the time of the audit since the ack letter must be received by the date the original tax return was filed.

Filing Requirements for Children for the 2015 Tax Return

A return is required if the child has over $6,300 in earned income such as wages or unearned income like interest , dividends, and capital gains over $1,050.

Receipts

Income and deductions on tax returns should be supported by receipts that you keep in your files for at least 3 years. To do your tax return, I generally only need those items that are sent in to the IRS like 1099's and W-2's. I keep a computer record of those so that I can more easily help you with any future IRS inquiry. For most deductions, I just want you to give me amounts and totals instead of the receipts. Keep a file of receipts and tax documents by year including a copy of the return. After 3 years, throw away the receipts and supporting documents, but keep the copy of the tax return.