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Information to Give Your Tax Professional for Best Results

By December 31, 2024blog

Information to Give Your Tax Professional for Best Results

Filing your tax return can be a daunting task, but thorough preparation and clear communication with your tax professional can make a significant difference. To ensure you don’t miss out on deductions, credits, or important reporting requirements, here’s a comprehensive checklist of things to inform your tax professional about that may not be in their tax organizer:

Charitable Contributions

If you made any charitable donations during the year, provide your tax professional with documentation. Remember:

  • Deductions are capped at 60% of your adjusted gross income (AGI).
  • Contributions must be made to qualified charities to be deductible.
  • You can only take advantage if you use the itemized deduction

Stock and Equity Compensation

If you received company stock as part of your W-2 income:

  • Inform your tax professional whether it was NSO (Non-Qualified Stock Options) or ISO (Incentive Stock Options).
  • Details about how you received the stock can significantly impact your tax situation.
  • If you can take advantage of tax strategies around these stock options

529 Plans and Flexible Spending Accounts (FSAs)

Report any contributions and distributions to/from:

  • 529 College Savings Plans

This account provides tax advantages, but your tax professional needs to know the details to apply them correctly.

Major Medical Expenses

If your medical expenses exceeded 7.5% of your AGI, inform your tax professional. These expenses may be deductible, but accurate reporting is essential.

Cryptocurrency Transactions

Did you sell cryptocurrency during the year? Whether you incurred a gain or loss, your tax professional must report this on your return to stay compliant with IRS regulations.

Real Estate Investment Trusts (REITs) and K-1s

If you received:

  • K-1s from investments or
  • Distributions from REITs or mutual funds,

let your tax professional know. These often have tax implications, including unexpected gains or losses from mutual fund sales.

Required Minimum Distributions (RMDs)

For individuals 73 or older, ensure your RMDs are reported correctly. Additionally:

  • If you donated your RMD to a charity, provide the details to ensure proper accounting.

Life Events

Significant life changes can impact your taxes:

  • Deaths in the family: If a spouse, parent, or dependent passed away, inform your tax professional.
  • Gifts exceeding $19,000 (beginning in 2025): A gift tax return may be required.

Home Energy and Solar Upgrades

Did you make energy-efficient upgrades, such as:

  • Adding insulation, energy-efficient windows, or exterior doors?
  • Conducting a home energy audit?
  • Adding solar panels or purchasing electric vehicles

These could qualify for energy tax credits, so ensure your tax professional is aware.

Business Assets and Expenses

For business owners:

  • Report any major asset purchases, such as trucks or equipment, so they can be properly depreciated.
  • Provide details about mileage used for business or rental properties.

New 1099-K Rules

Stay vigilant about 1099-K forms for transactions:

  • For 2024, you’ll receive a 1099-K if your transactions exceed $5,000.
  • This threshold is expected to change annually, decreasing to $600 in 2026.

Conclusion

Preparing for tax season is more than just gathering forms; it’s about proactive communication with your tax professional. By providing this information, you can ensure your tax return is accurate, compliant, and optimized for deductions and credits.

At Thompson Tax Group LLC, we’re here to help you navigate these complexities. Reach out to us with any questions or to schedule your tax preparation consultation.