Taking the standard deduction on your taxes is easy — however, as a new homeowner, you might want to explore itemizing your deductions instead. You and your tax adviser will work together to decide which option makes the most sense for your situation. To help that discussion, you will need to gather some paperwork to see whether to change the way you handle deductions.
Here are some of the documents you’ll need to pull together.
Income Statements
First, get all statements of income, including your W-2s and any 1099s from side work, interest income, tax refunds, prizes, or any other sources. If you received unemployment, stimulus payments, child tax credit payments, or any other income in the previous year, gather that documentation, too.
Expenses
If you had any expenses for losses, investments, a side business you or your spouse run, or some other expenses that might affect your taxes, make sure you have proper documentation of those.
Although most people can no longer write off moving expenses, some states still allow that deduction, so make sure you have the receipts for that if you live in one of those areas. (Ask your tax adviser if you’re not sure whether this option applies to you.)
Homeownership Documents
You’ll want to have a copy of your mortgage statement that shows the total amount of your mortgage loan and how much you paid in points (if applicable). Also get a copy of your property tax statement, home insurance, escrow payments, and any other expenses related to your new home purchase. Make sure you have a copy of your 1098 form from your lender showing how much you paid in interest on your mortgage loan.
Dependent Information
If you have children or other dependents, make sure you have their social security numbers and records of any childcare or educational payments you made. Your childcare provider should give you a statement that shows your yearly payments and their tax ID number.
Miscellaneous Paperwork
Depending on your situation, you may have other documents to gather, such as charitable donation receipts, health insurance statements, documentation related to hobby income and expenses, or other information that your tax adviser needs to see.
Make sure you have the correct bank account and routing numbers if you plan to either pay or receive your refund automatically. Contact your financial institution to get those numbers.
Also make sure you note your new address with the IRS and (if necessary) your state’s department of revenue.
Although this sounds like a lot of work, knowing you’re getting the best tax deal will be worth it. And no matter how you end up filing your taxes, taking the time to get all the paperwork you need in one place will make the process much easier. If you have questions about what you need, talk to your tax adviser beforehand so you can spend your time wisely this tax season.
*This is not tax advice; please consult your tax preparer.
