{"id":7463,"date":"2017-03-22T09:11:11","date_gmt":"2017-03-22T16:11:11","guid":{"rendered":"http:\/\/canary.kcprod.info/blog\/?p=7463"},"modified":"2022-01-11T17:12:29","modified_gmt":"2022-01-12T01:12:29","slug":"filing-your-taxes-2016","status":"publish","type":"post","link":"https:\/\/canary.kcprod.info/blog\/filing-your-taxes-2016\/","title":{"rendered":"Don\u2019t Procrastinate on Filing Your Taxes"},"content":{"rendered":"

In the words of George Washington, \u201cNo taxes can be devised which are not more or less inconvenient and unpleasant.\u201d In other words, taxes are a pain. We know it, you know it, but whether you like it or not, tax day (Tuesday April 18th<\/sup>) is less than a month away, so it\u2019s time to get your documents together for filing. To ease some of the pain we\u2019ve put together a checklist to help you get prepared.<\/p>\n

Collect all your Form 1099s<\/h3>\n

All bank and brokerage accounts issue Form 1099s that list dividend and interest income earned on your accounts and any securities you might have sold. If you have accounts that hold mutual funds or ETFs then it is highly likely that the fund companies will issue their initial 1099s in late January or early February and then revise their 1099s closer to the tax deadline. These revisions are based on a more accurate accounting of their underlying securities\u2019 qualified and unqualified dividends. Unfortunately, many people who own funds mistakenly think the revision is the fault of the brokerage firm, which is seldom the case. We know this likely results in having to file your taxes later and therefore receiving your refund later, but there is nothing we can do about it. The revisions are usually very small, so it may be worth taking the risk of an audit to file early and not worry about refiling based on the updated 1099s.<\/p>\n

By the way, you don\u2019t have to enter every single security sale transaction in your IRS Form 1040, your primary tax filing. You can just enter a summary of your gains and losses as long as all your 1099s provide short vs. long term gains, sale prices and the cost basis for all sold securities. Companies like Wealthfront make this process easy by enabling you to electronically download all your transaction gains and losses in an electronic spreadsheet or directly into your TurboTax or H&R Block software.<\/p>\n

Identify your harvested losses<\/h3>\n

If you have a taxable account with Wealthfront, our daily Tax-Loss Harvesting and Stock-level Tax-Loss Harvesting features can possibly lower your taxes depending on your tax situation. Your investment advisor should provide a summary of all your harvested losses that you can either apply to reduce your capital gains or up to $3,000 of ordinary income. Unused losses can be carried over to future tax years. Properly including the Form 1099 with your tax return is all that\u2019s required to claim the tax savings benefit of Wealthfront\u2019s Tax-Loss Harvesting and Stock-level Tax-Loss Harvesting.<\/p>\n

Check for Qualified Small Business Stock (QSBS) exclusion<\/h3>\n

If you liquidated an angel investment last year, you may qualify for this. As you can see in Qualified Small Business Stock Is An Often Overlooked Tax Windfall<\/a>, QSBS status can make an enormous difference in the amount of taxes you owe on your sale. The CFO of the company whose stock you sold is the ideal person to answer this question. Please keep in mind that it only applies to private company stock.<\/p>\n

Check if you qualify for an energy credit<\/h3>\n

You should receive a credit if you installed a qualified geothermal heat pump, a small wind turbine or fuel cell property before last year end. For more information on what qualifies for the credit please see Residential Energy Efficient Property Credit (Section 25D) at a Glance<\/a>.<\/p>\n

Check if you exercised stock options before year end<\/h3>\n

If you exercised your options after December 31st<\/sup>, you are still required to pay estimated taxes on the transaction on April 18th. For more information on how stock options are taxed please see Improving Tax Results for Your Stock Option or Restricted Stock Grant, Part 1<\/a>.<\/p>\n

Max out your IRA<\/h3>\n

People under 50 are allowed to contribute up to $5,500 per year to their traditional or Roth IRA and people over 50 may invest up to $6,500 per year. People who qualify for a SEP IRA<\/a> may contribute up to the lesser of 25% of your compensation or $53,000 per year.<\/p>\n

The really good news is any contributions you make this year to a Traditional or SEP IRA can be deducted from last year\u2019s taxes as long as you don\u2019t go over the limit. So if you have any spare money laying around, you should take advantage of this attractive feature \u2013 that is unless you need the liquidity.<\/p>\n

You\u2019ll have to submit your contribution by Wednesday, April 12th at 9am Pacific <\/strong>if you are a Wealthfront client. By the way, you should receive a Form 5498 that lists your IRA contributions in late May. Don\u2019t worry, your Form 5498 is for informational purposes only and therefore is not required to be filed with your tax return.<\/p>\n

We hope you find this list useful. Please let us know if you have any other suggestions we should share with our readers.<\/p>\n","protected":false},"excerpt":{"rendered":"

In the words of George Washington, \u201cNo taxes can be devised which are not more or less inconvenient and unpleasant.\u201d In other words, taxes are a pain. We know it, you know it, but whether you like it or not, tax day (Tuesday April 18th) is less than a month away, so it\u2019s time to […]<\/p>\n","protected":false},"author":4,"featured_media":7464,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[1315,1282,1278,1705],"tags":[2057,1741,1344,1359,1294],"coauthors":[99],"class_list":["post-7463","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-industry-insights","category-investing","category-planning","category-taxes","tag-qsbs","tag-stock-level-tax-loss-harvesting","tag-stock-options","tag-tax-loss-harvesting","tag-taxes"],"acf":[],"yoast_head":"\nDon't Procrastinate on Filing Your Taxes<\/title>\n<meta name=\"description\" content=\"Tax season is less than a month away. 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