Essential Tax Documents To Start Collecting Now

Tax Document Overview - Tax documents such as W-2 forms for employees and 1099-NEC forms for independent contractors are essential for reporting income from employment [2][3][5] - K-1 forms, which report income and deductions from pass-through entities like partnerships, are due later than other forms, specifically by the 15th day of the third month after the entity's tax year ends [1] Income Reporting - Employers must provide W-2 forms to employees earning $600 or more, detailing income and withholdings for taxes [2] - Independent contractors receiving $600 or more must be provided with a 1099-NEC form, which also reports income and any withholding [3][5] Retirement and Investment Income - Retirement accounts require annual statements, with 1099-R forms reporting income from pensions and IRAs, especially for amounts over $10 [7][8] - Social Security benefits are reported on SSA-1099 forms, which are sent out each January [9] Tax Deductions and Credits - Tax deductions can significantly reduce taxable income, with eligible expenses including mortgage interest, state and local taxes, and charitable donations [13][14] - Tax credits, such as the American Opportunity Tax Credit for education expenses, directly reduce tax liability on a dollar-for-dollar basis [17][18] Document Organization - Keeping tax documents organized is crucial for efficient filing and maximizing deductions and credits [26][27] - It is recommended to categorize documents into groups like earned income, investment income, and deductible expenses for easier access [27] Filing and Compliance - The IRS recommends maintaining tax records for at least three years to ensure compliance and facilitate any necessary audits [19] - Taxpayers should be aware of the deadlines for submitting various forms to avoid penalties and ensure accurate reporting [1][4][28]