Being Prepared: The Best Kept Secret To Low-Stress Tax Return Filing

By:  Benjamin Dorsey,CPA, CFP®, CDFA™, MST | Director of Tax Services

“In this world nothing can be said to be certain, except death and taxes”
— famous words from Benjamin Franklin that have stood the test of time (and likely will continue do so).

Another year is behind us, and April 15 approaches. Congress, meanwhile, continues to lurk in the background, with the potential for last-minute tax legislation that could retroactively impact 2014. Forms such as your W-2 and consolidated investment statements have Jan. 31 and Feb. 28 release deadlines, respectively. Oh, and the issuers reserve the right to amend them in the future. It is easy to see how the dreaded filing deadline becomes more and more of a last minute rush each year.

Like many professional tax-preparation organizations, BWFA provides its tax clients with a tax organizer to assist in organizing  receipts, information, and pertinent documents that will be utilized to prepare annual tax filings. That being said, we try to assist all clients, regardless of service type, in preparing for and filing their tax returns. To that end, we wanted to bring some special items to your attention.


All Americans will be affected in some manner by the Affordable Care Act.  As a result of this act, the IRS released  new tax forms for 2014. One of the most common forms will be Form 1095, which depicts the health-insurance coverage available to you from your employer.  Please be sure to provide this form with your tax documents to your tax professional.  If you do not receive a 1095, your tax professional will need to ask you additional questions regarding your and your family’s health insurance coverage for 2014.


Under current law, most taxpayers can only deduct medical expenses to the extent they represent more than 10% of their adjusted gross income (taxpayers 65 and older still have a threshold of 7.5% until tax year 2016). Before going through the hassle of organizing and adding up your medical expenses for your tax professional, deter- mine whether it is likely that you will meet the 10% threshold needed to receive any benefit. If you are self-employed, your tax professional will also need to know how much you paid for health insurance.


All deductions of any amount must be supported by a receipt. Any individual contribution greater than $250 must also have an acknowledgement letter from the charity, and the letter must be dated by the date your tax return is filed.  The letter must show the date and amount of any individual contribution greater than $250, and it should specify whether any goods or services were received as part of the contribution.


Taxpayers and tax professionals have continued to evaluate the benefit of converting traditional IRA accounts to Roth IRAs. Since these conversions are not a common annual occurrence for most taxpayers, it is imperative that you provide your tax professional with information related to any conversion completed in 2014. Additionally, if you expect lower income in 2015, it can be worthwhile to evaluate future conversions with your tax professional.


Because of the Affordable Care Act, it is imperative that students and dependent children who file their own return not claim their own dependency exemption. Allowing a child to claim their own dependency exemption, particularly a student, can cost the child and parent thousands of dollars  in healthcare penalties and/or credits.


Effective January 1, 2013, the amount you can give to one person in a given year without needing to file a gift tax return was increased to $14,000. That amount was not adjusted and will be the same in 2015. IRA contribution limits for taxpayers with taxable compensation will also stay the same for 2015: $5,500 for taxpayers younger than 50, $6,500 for taxpayers 50 and over. Annual 401(k) deferral limits to employer-sponsored retirement plans increased to $18,000, with a catch-up provision for taxpayers 50 and over of an additional $6,000.

Even without the assistance of a tax professional, an organized and informed taxpayer can stay ahead of the curve and file their tax return before April 15. If you do not use a tax organizer, try creating a checklist of items that are commonly used to prepare your return (W-2s, 1099s, K-1s, etc.). Many organizations make their forms available on the Internet as opposed to sending them to clients by mail. Keep on top of email notifications from the banks and brokerages with which you have accounts about the release of tax data and forms. Finally, whether you use your own software or employ the services of a tax professional, it is better to start your return early or send your documents to your tax professional sooner rather than later. This will lead to a calmer pace as you approach the filing deadline.