TAX PREPARATION-

                              DON’T FORGET TO REPORT ALL SOURCES OF INCOME!

 

 

Usually when we talk about preparing our income tax returns, we focus on tax deductions and credits and as a result of that we pay somewhat less attention to our various sources of income. While both items are equally important, when it comes to our income sources, taxpayers sometimes either mistakenly forget to report or intentionally do not state all of their income.

 

It is important to remember that when it comes to income, the IRS has a document matching system whereby it already knows who reported paying you any income. Wages, Self Employment Income, Interest, Dividends, Capital Gains, Royalties, and so on are reported to the IRS on your behalf by the parties that paid you. Not including these items on your tax return will result in your receiving a letter from the IRS asking why you didn’t include that income in your tax return.

Often, penalties and interest could result from the adjustments you may need to make by filing an amended income tax return.

 

The attached checklist gives the most common income items and the documents you will find them on. I always advise my clients to check off each item that applies to their situation so there will be less risk of missing an item that should be included. Please feel free to cut it out and use it to help you organize your taxes this year.

 

I’d rather prevent a potential IRS problem upfront than have to deal with one down the road. By organizing your records, you will lessen the chance of that unwelcome and often dreaded IRS letter with your name on it!!

 

Editors Note: Donald Scherzi is a Certified Public Account and a Certified Financial Planner. For questions regarding your finances or investments, call him at 746-1926 or email him at donaldcpa@bellsouth.net.  He has been a Heights resident since 1996. You may visit his web site at www.donaldscherzicpa.com for tips, strategies, and news to improve your total financial well-being.