Everyone’s life is different, and similarly, everyone’s tax return is different.
To perform a tax review, the first step is to determine why the review is being performed. If a tax review is needed because you were unhappy with last year’s outcome and your current year has not changed, then an analysis of withholdings throughout the year is necessary. If a tax review is needed due to a change during the year, then a more detailed review can be performed in a specific situation.
As a starting point, the following documents are used to perform a tax review:
- The prior year’s tax return – This provides guidance on where to start the review
- The most recent Year to Date (YTD) income statements:
- If you are a salaried worker, this would mean a YTD pay stub for all jobs worked during the year
- If you are an hourly worker, this would mean a pay stub for a typical work week as well as a YTD pay stub, if the most recent pay stub has a reduced number of hours
- If you receive a pension, a YTD statement of pension income and withholdings
- If you take distributions from pre-tax accounts, a YTD accounting of the distributions taken and withholdings from each
- Details of any significant changes in investments, such as any gains / losses on sales made during the year or new investments made which earn interest and / or dividends
- Updates to any deductions for the year such as:
- Mortgage changes
- Charity contributions
- Childcare expenses
- It is also important to put together any information about significant changes between tax years.
Tax reviews can be a detailed and important way to stay up to date on your finances and remove the uncertainty of tax season.
Have questions? Schedule a complimentary consultation for assistance with your specific situation. We’d love to help!