Looking for a Stress-Free Tax Filing for 2021? Try Our Tax Checklist
Now’s the time to gather and organize the information you’ll need to get started on your 2021 taxes. And remember: It was a strange year, which also means it has a few unique tax quirks.
Here are four things to know as you get a jump-start on this year’s tax season. And to help further de-stress tax season, consider using the checklist below to aid in the organization and filing process.
Refer to this handy checklist to help you gather the information you need to prepare your 2021 income tax return.
1. Key Dates for 2021
There are two big days—the actual tax deadline and extension dates. This year, the tax filing deadline is on Monday, April 18. If you request and receive an extension, your deadline will be Monday, October 17.
The last day to contribute to an Individual Retirement Account (IRA) for 2021 is also April 18. The maximum contributions are $6,000 for those under 50 and $7,000 for those over 50. Contributions to a traditional IRA can be deducted against your 2021 taxes. Contributions to a Roth IRA aren’t deductible, but withdrawals, including any gains, will be tax-free.
If you’re trying to decide between a traditional and a Roth IRA, make sure you know the differences.
2. Forms Are Coming
Keep an eye on your mailbox and inbox. Your employer, investment provider(s), and the government will soon start sending tax forms detailing your activities for the year. For example, you may receive a W-2 form that reflects your wages for 2021 or 1099-DIV that shows your investment income. Use the checklist provided above to help you track the forms you need to complete your return. If you’re a TD Ameritrade client, you can generally access the 1099 for your account online, giving you quick access to the information you need.
3. A Word on Corrected 1099s
You may receive a corrected 1099 form for a number of reasons. They include:
- Reallocation of income by the issuer (e.g., mutual fund company)
- A reporting error
- Receipt of updated information
Corrected forms may be sent as soon as early February and typically continue through September. Investments that often see capital reallocated include mutual funds, regulated investment companies (RICs), and Real Estate Investment Trusts (REITs) because they have so many different investments. Simple equity or options investments, which typically don’t reallocate their income, don’t usually send out corrected forms.
So what happens if you receive a corrected form after you file? You may need to amend your tax return. To help reduce the chance of this occurring, consider waiting to file your taxes.
4. Your Investment Activities
If you sold any investments last year and have capital gains or losses to report, you’ll need to file a Schedule D. To complete this schedule, you’ll need to know:
- Your cost basis, which is generally the initial purchase price of the investment plus any adjustments necessary
- The buy and sell dates to determine if the gain/loss is long term or short term
- If the transaction qualifies as a “wash sale”
You could keep track of all this information yourself, but if you have a lot of different securities in your account, with a lot of buying and selling, deciphering cost basis can be tricky. TD Ameritrade clients have access to Gainskeeper®, a transaction monitoring and reporting service that will track it all for you.
The Bottom Line
It’s true that tax filing is never going to crack the top 10 list of “favorite things to do in the new year.” But if you take a methodical approach with a tax checklist, you may be able to whittle down the amount of time you spend completing and filing your return.
TD Ameritrade does not provide tax advice. Clients should consult with a tax advisor with regard to their specific tax circumstances.