Importance of Tax Preparation Checklist and Documents for Tax Filing

21 May, 2024
10 mins
Vipul Taneja, VP, Finance Transformation

Table of Content

Key Takeaways
Why is Tax Preparation Checklist Important ?
What are Tax Forms?
Which Documents Do You Need for Filing Taxes?
Tax Deduction Checklist 
How to File Tax Forms?

Key Takeaways

  • Tax forms, also known as returns, are forms that are filed with a tax authority annually. In the United States these forms are filed with the IRS.
  • The documents required to file tax returns are categorized as personal information, dependent information and source of income. 
  • A tax preparation checklist helps you stay organized and ensures that you can file your tax returns with accuracy.


Preparing for the tax season can often seem like a daunting task. With a multitude of documents and information required to file tax returns, along with a looming deadline to compile taxes, it can often feel overwhelming. 

With a tax preparation checklist you get an overview of the various documents required while filing taxes, that helps you stay organized.This also arms you with information that will enable you to optimize your tax savings and plan ahead. 

In this blog, we provide you with a detailed checklist for tax preparation, understand why tax checklists are important and help you with a step-by-step process guide to file taxes. 

Why is Tax Preparation Checklist Important ?

A tax preparation checklist is extremely important, as it enables you to minimize any errors during tax filing, avoid any last-minute hassle of finding documents, and helps you stay stress-free. By providing you a ready reckoner it helps you to stay organized and have all information handy. 

Having a tax preparation checklist enables you to have all the documentation in place, which minimizes errors such as missing out on reporting some income. This safeguards you against any penalties. It also ensures that you do not miss out on any deductions and credits, and in the case of an audit, a tax preparation checklist helps in the timely submission of substantiating documents with the IRS or state authorities.

Further, a tax checklist enables you to prepare a financial plan to maximize deductions and credits for the upcoming tax year. 

What are Tax Forms?

Tax forms, also referred to as returns, consist of information related to income, deductions and other financial information that ascertains tax liability. Filed annually, with tax authorities such as the IRS, it helps individuals make tax payments or request refunds for excess tax paid. 

In the U.S., the tax forms are filed with the IRS and sometimes with the state tax collection agencies. The tax forms are prescribed by the IRS, with Form 1040 being the form used by individuals to file taxes. The tax form consists of sections related to personal details, income, deductions and tax credits that the individuals must fill out while compiling tax returns. 

Which Documents Do You Need for Filing Taxes?

Being ready with the documents required for tax filing helps you stay organized and ensure that you can file your tax returns hassle-free. By having all documents in place, you will have all the required information that will help you not make any errors. The documents required are categorized into three sections:

Tax Document Checklist

Personal Information 

The first set of documents that you should have in hand are those pertaining to personal information. This helps the tax authorities identify the person who is filing taxes, as well as the dependents and provides details with respect to where tax refunds, if any, can be credited. The personal information document checklist includes:

  • Full name as it appears on the social security card
  • Social security or tax ID number: The correct social security number or tax ID of self as well as dependents such as spouse, children, elderly parents who are covered in the tax return must be provided. 
  • Previous year state or federal tax returns: Previous year filing can be helpful to identify what you had reported last year. If you are using tax software, uploading previous year returns can help save time as the software can auto-fill data. 
  • Identity protection personal identification number (IP PIN): IP PINs are issued by the IRS to safeguard individuals against misuse of social security numbers. If you or your dependents have been issued an IP PIN you should have this information handy as well. 
  • Bank account details: You need to provide a bank account number if you are paying taxes directly from your bank account or want to receive a direct deposit of any tax refunds in your bank account. 

Dependent Information

If a taxpayer has any individual other than their spouse who relies on them for financial support they can claim them as dependents. However, to recognize someone as a dependent while filing tax returns, there are certain criteria laid down by the IRS that must be met. Dependents can be dependent children and dependent relatives. While filing tax returns one should also have dependent information. 

  • Full name of dependents with date of birth as it appears on their social security card.
  • Social security number or tax ID number
  • Form 8332 if the dependent child’s custodial parent is giving up their right to claim them as dependent. 
  • Dependent income, if any 

Sources of income

This is one of the most important sections, and taxpayers need to ensure that they have all the documentation in place. You need to ensure that you do not miss out on reporting any income as these can create issues during the audit process resulting in penalties. The checklist for sources of income includes: 

Tax Document Checklist

  • W-2 Forms: W-2 form is a wage and tax statement form that is provided to all employees by their employer by the end of January. This form provides detailed information regarding the annual income received by the employee, including bonuses and tips. It also provides details regarding the tax paid by the employee. 
  • Form 1099: To record income other than wages and salaries, Form 1099 is utilized. These are also used by freelancers and contractors. Based on the type of income, Form 1099 is further categorized into different types. 
  • 1099-G: This includes payments received from the government, such as unemployment compensation and tax refunds. 
  • 1099-Int: This includes details regarding interest earned from banks or other financial institutions. 
  • 1099-S: This includes income earned from the sale of real estate. 
  • 1099-Div: This includes income received as dividends from investments in stocks and mutual funds. 
  • 1099-B: This includes income earned from stocks, bonds and securities.
  • 1099-R: This includes income from sources such as retirement plans, annuities and pensions. 
  • 1099-NEC: This includes income that has been received by self-employed individuals, freelancers and contractors. 
  • 1099-MISC: This reports incomes from various sources, such as income earned by renting property. This also includes income received as prizes and awards.
  • 1099-SA: This is related to health savings accounts and long-term care reimbursements. 
  • Schedule K-1 forms: Income from trusts, partnerships and estates. 
  • Cryptocurrency transaction records
  • Alimony received (if the divorce agreement is dated before 31st December 2018)
  • Other income from sources such as jury duty pay, gambling related earnings. 

For self-employed individuals

For self-employed individuals, other than using the 1099-NEC for income, they should have these documents ready as well for income adjustments. 

  • 1099-NEC
  • Documentation of all business income and expenses
  • Records of home office expenses
  • Records of business assets to be depreciated 

Tax Deduction Checklist 

Deductions enable taxpayers to reduce their total tax liability and, in this way, maximize refunds. Taxpayers can opt for standard deductions, in which the deductions are already listed in Form 1040. However, if you have more deductions, you can itemize them. Taxpayers need to ensure that they have documented all deduction details and have all information ready.

Deductions Checklist

For itemized deductions 

  • Out-of-pocket medical expenses: These can be claimed as deductions if the expense exceeds 7.5% of gross income. 
  • Mortgage payments: These details are present in Form 1098 and consist of all details on mortgage payments, including interest payments, insurance premium payments, and property tax. 
  • Charitable donations 
  • Sales tax on state or local taxes: This includes deductions related to taxes paid, such as state or local taxes, as well as sales tax. 
  • Taxes paid with vehicle registration 
  • Casualty losses (if one has lived or owned property in a federally declared disaster area)
  • Real-estate tax

Deductions that are not required to be itemized

  • Educational expenses: Here, students can claim deductions related to education-related expenses, including interest payments on education loans. For educational expenses such as tuition fees, Form 1098-T is used, and for educational loan interest payments, Form 1098-E is used. 
  • Alimony payments (if divorce happened on or before December 31, 2018) 
  • Premium payment for self-employed health insurance. 
  • Classroom expenses: Educators and teachers can claim up to $300 for classroom expenses. 
  • Contributions to retirement accounts: Records of contributions made to individual retirement accounts (IRA) and simplified employee pensions (SEP) can be claimed as deductions. 

Tax credits

Tax credits reduce the taxes you owe on a dollar-for-dollar basis. While deductions reduce the total taxable income, credits reduce the actual tax bill. For example, if you have tax credits of $1500 and the tax bill is $5000, your final tax amount will be $3500 after considering the tax credit. Some of the tax credits are as follows:

Types of Tax Credits

  • The American Opportunity Tax Credit: This is an educational expenses-related credit that considers the educational expenses paid for a student for the first four years of higher education. We use Form 1098-T for this. 
  • Child tax credit: This provides taxpayers with child tax credits of $2000 per dependent child, subject to fulfilling certain criteria such as age. 
  • Savers credit: This is a credit provided to lower or mid-income taxpayers for contributions towards retirement savings. 
  • Adoption tax credit: This takes into consideration adoption-related expenses that are paid by taxpayers. Here, taxpayers also need to have the social security number of the child they have legally adopted. 
  • Child and dependent care credit: Here they need to provide the child care provider’s name, tax identification number, and address. 

How to File Tax Forms?

Filing tax forms involves a series of steps that individuals need to pay attention to. 

Tax Filling Process

  • Determine if you qualify to pay taxes

    The first step involves determining if you qualify to pay taxes and, hence, file a return. This depends on many factors, such as age, total income and filing status. Most U.S. citizens and permanent residents need to file taxes. Self-employed individuals whose net income is more than $400 need to file returns. In some cases if you are identified as a dependent by a taxpayer, you would not be required to file taxes. 

  • Identify the tax bracket you fall into 

    If you have to file your tax form, then identify the tax bracket you fall into. The federal taxes are categorized into brackets based on income. The brackets are progressive, meaning that the tax rate increases as income increases. Other than federal taxes take note of your bracket under state taxes. While some states have a similar progressive rate, some have a flat rate and a few states do not have state taxes. 

    2024 Tax Bracket and Income Tax Rate

    Tax rate


    Head of household

    Married filing jointly or qualifying widow

    Married filing separately


    $0 to $11,600

    $0 to $16,550

    $0 to $23,220

    $0 to $11,600


    $11,601 to $47,150

    $16,551 to $63,100

    $23,221 to $94,300

    $11,601 to $47,150


    $47,151 to $100,525

    $63,101 to $100,500

    $94,301 to $201,050

    $47,151 to $100,525


    $100,526 to $191,950

    $100,501 to $191,950

    $201,051 to $383,900

    $100,525 to $191,950


    $191,951 to $243,725

    $191,951 to $243,700

    $383,901 to $487,450

    $191,951 to $243,725


    $243,726 to $609,350

    $243,701 to $609,350

    $487,451 to $731,200

    $243,726 to $365,600


    $609,351 or more

    $609,351 or more

    $731,201 or more

    $365,601 or more

    Source: IRS

  • Be aware of the important deadline to file tax returns

    To avoid penalties, tax payers need to be aware of important details, such as the tax return deadline. The IRS deadline is mostly April 15th, with few exceptions in some states. One can apply for a tax return filing extension; however, the tax payment must be made by April 15th. 

  • Prepare all tax-related documentation 

    Once you have determined your tax bracket, refer to the tax documents checklist and have all the information and documents pertaining to personal information, dependent information, source of income, deductions and tax credit handy. Using a tax checklist and organizing all documents will help you file your taxes without any stress. 

  • Decide the method you will use to file the tax form 

    To file your tax return, you have to fill out Form 1040 with the IRS. To do so, you can 

    • Manually fill out Form 1040 and mail to the IRS
    • E-file Form 1040 by self
    • Utilize tax software where you can upload documents such as previous tax returns, and it will automatically fill in all required information
    • Leverage the services of financial professionals, such as CPAs,

    The IRS, under its free file program, provides individuals with free online tax preparation software if their annual income is less than $79,000. 

  • Complete tax filing and settlement with the IRS

    Once you have filed Form 1040, if you need to pay taxes, you can do so directly by utilizing electronic payments, card payments, checks and cash. If you are unable to pay the total taxes at once, the IRS provides payment options where you can pay your taxes over a period of time. 

In case of refunds, one can opt for direct receipt of the refund by providing bank accounts. Tax refunds are usually made within 21 days of e-filing. 


Preparing and planning ahead for the tax season will not only allow you to avoid the last minute rush to file tax forms, but it will also ensure accuracy and enable you to optimize tax savings by identifying all possible tax credits and deductions. To file your tax forms efficiently, especially if you are self-employed or a small business owner it is important to have an overview of your finances. 

If you are a small business owner, utilizing accounting software to record all transactions will help you keep track of all your income and expenses. It not only enables you to get an overview of the financial position but also aids you during the tax filing process by ensuring that you have all the required information. 

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1) What are tax extensions?

Tax extensions are requests related to additional time to file taxes with the IRS. Here, one can get up to six months of extension for filing taxes. Taxpayers need to request extensions prior to the filing deadline date. Tax extensions only extend the filing date and not the actual tax payment. 

2) How to become a tax preparer?

To become a tax preparer, one needs to get training on tax preparation or get accredited by the Accreditation Council for Accountancy and Taxation or the National Association of Tax Professionals. Next, they need to get a Preparer Tax Identification Number (PTIN) through the IRS as well as a state license if required. 

3) How to start tax planning?

To start tax planning, taxpayers first need to know under which tax bracket they fall and ascertain the tax rate. Next, they need to identify all the deductions and tax credits they can utilize to reduce their tax liability. They should refer to the tax document checklist and have all documents ready. 

4) How to prepare taxes for small businesses?

To prepare taxes for small businesses, they should gather all the information and data they require, classify their business, identify all the forms they need to file and file the tax form within the deadline. They should ensure that they make tax payments regularly to avoid penalties. 

5) How to prepare for the tax season?

To prepare for the tax season, ensure that you have all required documents in place related to personal and dependent information, income sources, deductions and credits. Next, identify the tax bracket you fall into based on your income. Finally, determine the method you will use to file taxes.

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