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February 11, 2003
In our last
article, Millian Toms gave businesses a list of
the paperwork they’ll need to have in order and bring along before she attempts
to prepare their taxes.
It was a long list.
But the list for pending tax returns is
even longer. Millian knows almost all of it by heart. If you have an appointment
with Millian, these are the things you’re going to need – for starters. You can
print this out and use it as a check-off list, but don’t worry about the items
that don’t apply to you:
Income
·
Last year’s tax returns.
·
The W2 you should have received in the mail by now.
·
1099 forms, which show dividends and interest, pensions,
and non-employee compensation (“For example, I’m not an employee of yours,”
Millian said. “So that means you send me a 1099.”)
·
Records of alimony payments received and/or paid.
·
Records of child support payments received and/or paid.
This is not taxable income nor deductible, but it is needed for
Michigan
household income.
·
Have business income and related expenses broken down by
type of expense (if, for example, you’re self-employed).
·
Bring all your brokerage statements that show all sales and
purchases of stock and bonds. If there were sales, you must provide the cost of
items sold to determine the gain or loss to be reported.
·
If you own rental property, you need to provide a list of
income and expenses broken down by type.
·
Bring a K1 form for each partnership, S corporation or
trust you have an interest in.
·
Records of unemployment received.
·
Records of Social Security received.
·
Any other income (“The preparer will help you decide if it
is reportable or not,” Millian says.
Adjustments
to Income
·
IRA contribution records.
·
Student loan interest payments.
·
Medical savings account information.
·
Moving expenses if they relate to a job change.
·
The cost of health care insurance premiums you personally
pay for.
·
Self-employment retirement contributions.
Itemized
Deductions
In order for this to do you any good, your
itemized deductions must total:
·
$4,700 for a single person
·
$6,900 for a head of household
·
$7,850 for married persons, filing jointly
“Unless your deductions add up to at least
those figures, you cannot itemize,” Millian says. “And unless you own your own
home with a mortgage, you normally will not be able to reach those totals.”
·
Medical Expenses
“Your medical and dental costs must exceed 7.5 percent of
your adjusted gross income to qualify,” Millian adds.
But back to the list:
·
Your state and local tax payments from last year’s tax
return are deductible.
·
All real estate taxes are deductible.
·
License tab costs are deductible “It’s a personal property
tax on the value of the vehicle,” Millian says.
·
If you bought or sold a house, bring the closing papers.
·
Home mortgage interest, including equity loans.
·
Investment interest and expenses.
·
Charity gifts (“You must have a receipt for anything over
$250,” Millian says.
·
Miscellaneous deductions must total over 2 percent of
adjusted gross income to qualify.
Miscellaneous expenses include:
o
Unreimbursed employee expenses, such as dues, travel,
subscriptions, tax preparation, including the cost of things like Turbo Tax
programs and books.
o
Other investments, such as fees charged by brokers or fees
paid for safety deposit boxes.
That’s the Federal tax return list. For
your
Michigan
tax return, you need to add the following:
·
Taxable value of your residences.
·
List of
Michigan
tuition paid for undergraduate students.
·
List of amounts donated to
Michigan
public institutions (colleges, public television, DIA, etc.)
·
List of contributions to national and
Michigan
political parties or candidates for office.
·
List of endowment funds to the certified Michigan Community
Foundations or component funds.
·
List of contributions to
Michigan
approved medical care savings accounts and amounts withdrawn and then used.
There’s that little question on the
Michigan
return brought about by the Internet. By now, anyone who has purchased something
over the Internet has noticed they have done so tax-free. The State of Michigan
now requires all out-of-state purchases by mail order or Internet be reported
and tax paid on those purchases when you file your income tax return.
“Consider your answer thoughtfully. A no answer when you
have in fact made purchases is thought to constitute a fraudulent tax return,”
Millian says. You then have the opportunity to declare your purchases.
And finally, if you paid household help more than $1,300
during 2002, you must have notified the Federal Government either on a W-2 or a
1099 form. If you have not done either, this is your last chance to report it on
Schedule H attached to your Federal income tax return. Not reporting it could
constitute a fraudulent tax return.
Now that you’ve got all your tax
documentation pulled together, call Millian at 248-541-2052 to set up your
appointment.
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