Getting Ready for Tax Season: Tips for Travelers
By Joseph Smith, EA, contributor
January 20, 2012 - Pretty soon you’ll be filing your 2011 tax returns, so here’s a quick reminder of what to look for in the mail:
1) Each employer you had during the year will send you a W2 form. A W2 is a statement of wages reported to the IRS indicating your total income and federal tax withholding; and to the state revenue agencies, your state income and state withholding. Your tax return should reflect all the income reported on these forms as they are matched to the database that the IRS maintains.
2) If you did any independent contracting work, you will receive a 1099MISC reporting the amount of payments. 1099s can also be issued for other things such as retirement distributions, settlements, proceeds from stock transactions, proceeds from the sale of a home and any other distribution of funds that are not considered wages.
3) 1099s will also be sent by banks, reporting interest and dividends. These are more commonly known as a 1099DIVs and 1099INTs.
4) If you have a mortgage, you will receive a 1098 from the mortgage company indicating the amount of interest you paid during the year. There is usually an entry for the amount of real estate taxes and private mortgage insurance you paid, as well. If you have more than one mortgage, or refinanced during the year, be sure you have received a statement from each of these institutions.
5) There are other miscellaneous items you may receive, such as donation statements to charitable organizations like churches and other nonprofit, tax-exempt organizations to which you may have donated cash or goods.
Since most travelers have their mail forwarded, many will not file their tax returns in the first months of the tax filing season but toward the middle of March. Never be afraid to file for an extension and wait for the rush to be over. Not only will you have a clearer head, so will your tax professional. In fact, your tax preparer may be able to do more for you since he or she does not have a deadline to contend with.
You cannot file your return until you have these documents in place. Travelers receiving forwarded mail can potentially miss a critical mailing. One way to double-check that you aren’t missing anything is to compare the list of statements you have received thus far against the list that you received last year for your 2010 return.
Lastly, if you’re interested in finding the best tax professional, look for the one that asks the most questions. To get the maximum benefit from a tax professional you not only want to have your return filed, but you also want to look into the future and find ways in which you can save. This is what you’re really paying the preparer to do--complete a historical document recording your earnings and taxes for 2011 and use that information to assemble a strategy for 2012 and beyond.
About the author:
Joseph Smith is an IRS Enrolled Agent (EA) and former travel respiratory therapist whose firm, TravelTax, provides tax preparation and audit representation for the mobile professional.
© 2011. AMN Healthcare, Inc. All Rights Reserved.
