2021 TAX RETURN: How To Be Ready For It.


It comes around at the beginning of each year. It’s the time of year many Americans dread. That’s correct, the start of tax season is here again. The time of year where you need to start gathering everything that is needed to prepare your tax return.

Except for this year, all of America is preparing for an added twist: the stimulus check or credit that you might or might not have received. How do you prove this payment to your tax preparer, and where do you get these forms?  

As you figure out your strategy for filing your returns this year, you need to consider when you are going to start gathering your documents and information. This is all information your preparer is going to need to accurately file your taxes on time.  

Choose a Professional to Prepare Your Tax Return 

While you might feel inspired to file your taxes on your own, a far safer option would be to have your business and personal tax returns prepared by a licensed professional. By doing so, you receive the benefit of some protection against erroneous filings. You also get peace of mind knowing that you didn’t miss something important.  

If this is the first time you have elected to have your taxes done by a professional, you will want to take some care in making your choice of person to prepare your taxes. First, you can always have your taxes done by one of the major companies that specialize in filing taxes for clients. Since they only hire licensed preparers, you don’t have to worry about credentials.  

If you decide to go with a local CPA or other professional, you want to make sure they hold the proper licensing, which is also in good standing. You might also want to seek out referrals from trusted family members and friends.  

When you find the right person, you will want to make an appointment and ask for details about any documents and information you will need to provide.   

Gathering Financial Documents for your Tax Return

For your preparer to create accurate returns, they will need certain documents and information about your finances from last year. The baseline documents they will likely need include the following:  

The List:

  • Your W-2 from your employer  
  • Any relevant form 1099 information (for miscellaneous forms of income)  
  • Any receipts related to charitable contributions  
  • Mortgage statements for the mortgage interest deduction  
  • Paid property tax bills  
  • Student loan statements for the interest deduction  
  • Bank statements for interest and investment income information  
  • Bank check registers or credit card statements for itemized deductions  
  • Stimulus Payments: bank statement, or check stub, providing the amount deposited.   

Details that help

In place of providing check registers or credit card statements for itemized deductions, you might want to take a shot at listing out possible itemized deductions on your own. This will help save your preparer time, which might lower the cost of their services a little. Itemized deductions you don’t want to miss include home office expenses and any expense you might have incurred by using your home or car as part of a business venture.  


Also, any effort you can make to organize your documents will be very helpful. If you show up will everything in a shoebox, it’s going to make the preparation of your form 1040 a lot more difficult and time-consuming. It also increases the chance an important income item or deduction might be missed on your return.   

Finally, document income that is reported via form 1099. By law, 1099’s must be mailed by January 31st. However, things do get missed or lost in the mail. It’s still your responsibility to account for all sources of income.   

Business Income Information  

All small businesses, whether legal entities or sole proprietorships, must file a tax form as well.    

  • Sole Proprietors: this means that operate under your name or a “DBA” that is linked to your name.   
  • This type of business will be filed on a Form Schedule C and attached to your 1040 return.   
  • You must provide your tax preparer with a Profit and Loss Statement, or 12 months of business bank statements.   
  • LLC’s, Partnerships, and Corporations: this means that you are a registered entity within a state, and will be filing a tax form 1065, 1120, or other forms.   
  • Your tax preparer must have a detailed Profit and Loss statement on your business, and many must also provide a Balance Sheet.   

If a CPA is filing your taxes they can also help you prepare a profit and loss statement for your business if you provide the bank statements and descriptions for your transactions. Of course, that will probably come with an additional cost.  

Gathering Personal Information for your Tax Return

Along with your financial records, you will want to make sure you provide your preparer with all the personal information possible. Here’s a list of information they will need:  

  • Your legal name, address, and social security number  
  • If filing a joint return, they will need the same information for your spouse  
  • If you have dependents you can claim, they will need their names, ages, and social security numbers  
  • A detailed listing of real estate property, including addresses  

Do You Need to File for an Extension?  

If for any reason you believe you are going to have trouble completing your tax forms by the April 15 deadline, you can request an extension by filing form 4868. This is a request for an extension until October 15. While you will likely be granted the extension, you will still have an obligation to pay your estimated tax liability with the extension form. Failure to have paid at least 90% of your liability could result in penalties.  

Gathering of Banking Information for your Tax Return

If you anticipate getting a refund, you can get that refund in one of two ways. You can have the IRS issue you a check, or you can provide them with your banking information right on your 1040 form. The IRS will need your bank’s ABA routing number and your bank account number to issue a direct deposit. By choosing the direct deposit option, you may get your refund much sooner than you would have to wait for a paper check.  

Did You Receive a Stimulus Check Amount?  

The year 2020 will always be known as the year the nation had to deal with the COVID19 pandemic. As an offering to families who were struggling with financial issues due to the virus, the IRS/U.S. Treasury sent out a stimulus check amount of $1,200 for individuals and $2,400 for married couples, plus $500 for each dependent under the age of 18.   

The payments went out to approximately 180 million citizens. If you qualified for a stimulus payment but did not receive a check due to logistical issues, you can request your stimulus payment on your 2020 return.   

You can check the status of your payment here: Get My Payment (irs.gov).  

Or, you can go to the IRS website and type “Get My Payment” into the search bar.   

Next Steps:   

When you have everything organized and ready to go, it’s time to see your preparer. If you would like more updates about your taxes and financial information, be sure to sign up for our latest blog updates. 

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