My Military Savings – Serve. Save. Enjoy.


It’s Tax Time! – What Do I Need to Do?

By Charlie M.

Tax season is right around the corner and by preparing now you’ll prevent the headache of last-minute scrambling. Gather the information you’ll need now so you can beat the rush and get that refund even faster! If you end up having to pay, you’ll know that sooner too, giving you time to prepare and save for that payment if necessary.

Let’s start by determining what documents you’ll need. Some documents will be mailed to you in paper form and some will be available online. Either way, put them in one place like a large envelope or in a dedicated file on your computer.

The most common tax documents needed are your:

  1. W-2 forms from your employers that report your wages and taxes withheld
  2. 1099 forms that report your non-wage income such as bank or credit union interest, dividends, self-employment, non-employee compensation, third party payment platforms, broker transactions, unemployment, cancellations of debt, pensions or retirement income
  3. Mortgage statements with interest and tax payment info
  4. Receipts for charitable donations, medical expenses, and education expenses
  5. Form 1098-T Tuition Statement if you paid for qualified education expenses

Other information you’ll need:

  1. Personal information – full names, Social Security Numbers, and birthdates for yourself, spouse, and children
  2. Bank routing number and account number to receive your refund by direct deposit or to pay your balance due if you choose
  3. Last year’s tax forms
  4. Form 8332 showing that the child’s custodial parent is releasing their right to claim a child to you, the noncustodial parent (if applicable)
  5. If self-employed –
    • Forms 1099, Schedules K-1, income records to verify amounts not reported on 1099-MISC or 1099-NEC
    • Records of all expenses — check registers, credit card statements, and receipts
    • Business-use asset information (cost, date placed in service, etc.) for depreciation
  6. Rental Income -
    • Records of income and expenses
    • Rental asset information (cost, date placed in service, etc.) for depreciation
    • Record of estimated tax payments made (Form 1040-ES)
  7. Investment Information –
    • Interest, dividend income (1099-INT, 1099-OID, 1099-DIV)
    • Income from sales of stock or other property (1099-B, 1099-S)
    • Dates of acquisition and records of your cost or other basis in property you sold (if basis is not reported on 1099-B)
    • Health Savings Account (HSA) and long-term care reimbursements (1099-SA or 1099-LTC)
    • Expenses related to your investments
    • Record of estimated tax payments made (Form 1040-ES)
    • Transactions involving cryptocurrency
  8. Miscellaneous income and losses –
    • Payment card and third-party network transactions (1099-K)
    • Gambling income (W-2G or records showing income, as well as expense records)
    • Jury duty records
    • Hobby income and expenses
    • Prizes and awards
    • Trust income
    • Royalty income (1099-MISC)
    • Any other 1099s received
    • Record of alimony paid or received with ex-spouse’s name and SSN
    • State tax refund

Once you’ve gathered your information, you’ll want to decide on how you want to file. You can always do it the old-fashioned way using the paper 1040 form and associated schedules, but this is the 21st century and there are better ways! If you want to tackle doing your taxes on your own be sure to download a copy of the IRS Publication 17, Your Federal Income Tax (For Individuals). This book covers the general rules for filing a federal income tax return. It explains tax law in a way to make sure you pay only the tax you owe and no more.

Another excellent resource for military members and families is Publication 3, Armed Forces Tax Guide that covers the special situations for active-duty members. Publication 4940, Tax Information for Active Duty Military and Reserve Personnel, a one-page synopsis of tax benefits, credits, and other information.

Are you a military spouse with your own business? If so, download Publication 5801-A, Tips & resources for Military Spouse Entrepreneurs.

There are many options for filing your taxes, many of them free. Most military installations have a tax office manned by IRS trained volunteers. You may qualify for free tax preparation and filing services through the Department of Defense’s MilTax, a free tax resource for the military community through Military OneSource. MilTax is a suite of tax services available for members of the military, as well as qualifying veterans and family members. There are no income limits.

Another free option is the IRS Free File program, a public-private partnership between IRS and the Free File Inc, leading tax software providers make their online products available in both English and Spanish for free. Each IRS Free File provider sets its own eligibility rules based on age, income and state residency.

Many of the nationally known income tax preparation services are located on or near military installations. These companies often advertise heavily and can be expensive to file. Some will offer “instant” refunds, but these are actually loans and can carry high interest rates and fees. If you are due a refund and file electronically, you typically have your refund within a couple weeks. Don’t waste money on fees and interest just to get your money a few days early.

Do you need a professional tax preparer or can you do my taxes yourself? This decision usually centers on a several factors:

  1. Is your tax situation complex or simple? Do you have multiple sources of income, deductions, credits, or investments? Do you own a business, have rental properties, or foreign accounts? Do you have any life changes that affect your taxes, such as marriage, divorce, or retirement? If your tax situation is complicated, you may benefit from hiring a professional who can handle the details and avoid errors or omissions. If you have a simpler case with W2 income, interest earned, a mortgage, and charitable donations, doing it yourself with software may work well for you.
  2. How confident are you in your tax knowledge and skills? Do you understand the tax laws and rules that apply to you? Do you know how to use tax software or online tools? Do you have the patience and accuracy to fill out the forms and schedules? If you are not comfortable with doing your own taxes, you may benefit from hiring a professional who can explain the process and answer your questions.
  3. How much time and effort are you willing to spend on your taxes? Do you have all the documents and records you need to file your taxes? Do you have enough time to prepare and file your taxes before the deadline? Do you have the energy and motivation to do your own taxes? If you are too busy or stressed to do your own taxes, you may benefit from hiring a professional or using one of the options as your installation’s tax office, MilTax or commercial software or who can save you time and hassle.
  4. How much money are you willing to spend on your taxes? Do you have a budget for tax preparation and filing fees? Do you think you can save money by doing your own taxes or by getting a bigger refund? Do you want to avoid penalties or audits that may cost you more in the long run? If you are concerned about the cost of hiring a professional, you may want to compare the fees and services of different tax preparers and see if they are worth it.
  5. Form 1098-T Tuition Statement if you paid for qualified education expenses

There are different kinds of tax preparers, and a taxpayer's needs will help determine which kind of preparer is best for them. With that in mind, here are some quick tips to help people choose a preparer. How do you decide on a professional preparer? Here are some good pointers:

Check the credentials and experience of the preparer. One excellent resource is the IRS Directory of Preparers of enrolled agents, CPAs, attorneys, or others who participate in the Annual Filing Season Program. These preparers have met certain education and ethical standards and can represent you before the IRS in case of an audit or dispute.

  1. Check the preparer's history with the Better Business Bureau.
  2. Ask about fees. Taxpayers should avoid tax return preparers who base their fees on a percentage of the refund or who offer to deposit all or part of their refund into their financial accounts.
  3. Be wary of tax return preparers who claim they can get larger refunds than others.
  4. Ask if they plan to use e-file.
  5. Make sure the preparer is available. People should consider whether the individual or firm will be around for months or years after filing the return. Taxpayers should do this because they might need the preparer to answer questions about the preparation of the tax return.
  6. Ensure the preparer signs and includes their preparer tax identification number (PTIN). Paid tax return preparers must have a PTIN to prepare tax returns.

Looking for additional finance related resources? Get a start on your 2024 holiday budget today! Click Here.

Serve.  Save.  Enjoy.