Checklist: What tax documents do I need to keep?

With electronic communication taking over, many of us don’t pay much attention to mail anymore. But tax time is coming, so this month, you’re likely to start seeing a lot of documents in the mail from the IRS. Do you know what the documents are and what you’ll need to keep? Here’s a guide for what to keep out of your “junk mail” pile. 

New This Year 

An African-American woman checks her mailbox, looking at the envelopes in her hand.

There are two new documents you need to be on the lookout for to complete your 2021 tax return.

  • Letter 6419: This document reports the total amount of advance Child Tax Credit payments received in 2021. If you or your family received any Child Tax Credit payments, keep this document to compare the amounts received with the amounts you can properly claim. If you received less than you were eligible for, you may be able to claim a credit! Note that if you moved, changed bank accounts, or your checks or deposits were undeliverable, the Letter 6419 you receive may be outdated. Beginning January 31, you’ll be able to check your online IRS account for the correct information. 

  • Letter 6475: If you received Economic Impact Payments, this letter will help you determine if you are entitled to and should claim the Recovery Rebate Credit on your 2021 tax return that you file in 2022.  

If you lose these letters or if the information is outdated, you can obtain the information from your IRS Account. To create or access your account, you can follow the instructions in our handy IRS Account Setup Guide.  

Form W-2: 

If you’re a salaried employee, your W-2 should be available from your employer by the end of January. Form W-2 is also known as the “Wage and Tax Statement,” and it’s one of the most important documents you need for your tax return. As the name suggests, it includes your income from the prior year and how much your employer withheld in taxes. If you earned income from gambling, you might also see a W-2G. 

Form 1099:  

Non-employment income is generally reported on Form 1099. There are several different types of Forms 1099, and any you receive should be given to your tax preparer to complete your return. 

  • In 2020, the IRS rolled out 1099-NEC to report non-employee compensation. If you were self-employed or worked as a freelancer, consultant, gig worker or independent contractor, you’ll likely be receiving this document.  

  • 1099-R reports distributions from retirement plans, pensions, IRAs or annuities. So, if you’re retired, a 1099-R might be coming your way.  

  • 1099-G provides certain government payments such as unemployment income, government refunds and agricultural payments. 

  • You may see forms 1099-B, 1099-INT, or 1099-DIV if you received earnings from stock transactions, interest on investments, or dividends paid out.  

  • SSA-1099 reports any benefits you may have received from Social Security. 

  • If you have a health savings account or a medical savings account, 1099-SA reports distributions from those accounts. 

  • The IRS considers canceled debt as income, so 1099-A and 1099-C report income if some or all your mortgage, credit cards, or other debt is canceled or settled for less than you owe. 

  • If you, your child, or your child’s school received funds from a 529 account for college tuition, you might receive 1099-Q.  

  • If you sold your home or other real estate, you may see the proceeds reported on a 1099-S.  

  • For income that doesn’t fall into the categories above, you may see that money reported on a 1099-MISC. 

Form 1098:  

While the documents listed above report money that was paid to you, Form 1098 reports money you paid, particularly for homeownership and educational expenses.  

  • Form 1098 is used to report mortgage interest you paid to your lender. If you paid your homeowner’s insurance or property taxes through your escrow account with your mortgage servicer, those expenses may also be included. 

  • 1098-E reports how much interest you paid on student loans. 

  • If you or a dependent are currently enrolled, you’ll likely receive 1098-T, which details the amount of tuition and other fees paid to an educational institution. 

Form 8606:  

You’ll use this form to report IRA-related transactions, such as distributions, converting a traditional, SEP or SIMPLE IRA to a Roth IRA, and particularly, to report nondeductible contributions to a traditional IRA. Nondeductible contribution refers to any money you put into a traditional IRA that you don’t deduct on your return.  

Form 5498:  

Other IRA contributions you’ve made are reported using Form 5498. Your IRA trustee or issuer files this form, so the copy you’ll receive in the mail is just for your own records. 

IRS Notices:  

If you receive any notices from the IRS, make sure you save them. There are many reasons the IRS may send you a notice, and they often contain valuable information. No matter what type of notice you receive, talk to your tax preparer about the next steps you should take to make sure you respond appropriately. 

Schedule K-1: 

This document is used to report the income, losses, and dividends of a pass-through organization, such as an S corporation or Partnership, to its shareholders and partners. Each owner uses their K-1 document to prepare their personal tax return. 

Dependent Care Statements: 

If you paid childcare expenses to a qualified provider in 2021, you should receive statements reporting those expenses. 

Charitable Contribution Verification Receipts: 

If you made any charitable donations this year and are able to itemize your deductions, you’ll need receipts from the organization that received your donations.  

Still feeling overwhelmed and not sure what to do with these documents? Make it easy on yourself and save them for your tax preparer. You don’t have to face tax season alone – Padgett is here to be your full-service tax and accounting partner. Find an office near you today! 

Do you have the support you need to manage your small business bookkeeping? Contact us to schedule an appointment to speak with a local small business advisor.