Complete Tax Preparation Checklist (2023)

Even if you outsource your tax preparation to a professional, you’ll still need to have all your documents ready before you can get started. Here are the important files and forms you’ll need to gather:

Personal information

First, you need to prove to the IRS that you are who you say you are. That means providing identifying information for yourself, as well as any spouse or dependents.

Collect the Social Security numbers and dates of birth for yourself and anyone else who will be part of your tax return. Besides children, elderly parents and relatives living in your household may also be considered dependents.¹

Income documents

Once you’ve gathered your personal information, make sure you have your various income documents. These may include:

• W-2s: Traditional employees should receive a W-2 from their employer by January 31.
• 1099 forms: If you did any independent contract or freelancing work, you’ll likely receive a 1099 form. There are several different kinds, such as the 1099-NEC for contracting work, 1099-DIV for dividends, and 1099-MISC for miscellaneous income, like royalties and prize winnings. You’ll also receive a 1099-K if you earned more than $600 in gross income or payment from a third-party payment processor like PayPal.² Keeping all these forms organized can get confusing, especially if you worked multiple non-salaried jobs. Gathering them all in one place as part of your tax prep will make the tax filing process smoother.

The government offers various tax deductions to help people lower their tax bills. Here are some examples of tax deductions that might increase your savings.

Donations to charity

If you itemize your deductions, you can claim a deduction for donations you made to qualifying organizations, such as nonprofit groups. These deductions typically can’t exceed 50% of your adjusted gross income, though sometimes a lower limit of 20% or 30% will apply.³

Child care costs

If you paid for daycare, a babysitter, or other childcare services for your child who’s under the age of 13, you may be able to qualify for a child care deduction. You can claim 35% of qualifying child care expenses of $3,000 for one child or dependent or up to $6,000 for two or more children.⁴ Keep track of your total expenses, as well as the provider’s name, address, and tax ID.

Home mortgage interest

If you paid interest on a home mortgage, you can use Form 1098 to deduct the amount you paid.⁵ Homeowners who took out a home equity line of credit (HELOC) or home equity loan to pay for qualifying home improvements or home renovations can also claim a tax deduction through 2025.⁶ As you go through this tax preparation checklist, make sure to save your mortgage loan records that indicate how much interest you paid.

Education expenses

If you paid college tuition, student loan interest, or other qualifying education expenses throughout the year, you can use Form 1098-T to claim a deduction.⁷ Keep records of your expenses, like:

• Tuition and fees
• Qualifying education expenses, such as textbooks and supplies. Note that some related expenses, like rent and transportation, do not qualify.
• Qualifying work-related education, which may include courses required by your employer or taken to improve your skills

Student loan borrowers in repayment may also be able to claim the student loan interest deduction for up to $2,500.⁸

Investment interest expenses

If you borrowed money to purchase property for investment purposes, you might be able to deduct any interest you paid on that loan as an investment interest expense. This deduction applies to money you borrowed to pay for property that will earn investment income, such as interest, dividends, annuities, or royalties.

If your investment interest expenses are lower than your net investment income, then you can deduct the full amount. If your interest expenses exceed your investment income, you can deduct the expenses equal to the net investment income amount. File Form 4952 to claim an investment interest expense deduction.⁹

Dental and medical costs

You can also deduct qualified medical and dental expenses you paid throughout the year for yourself, your spouse, or your dependents. Out-of-pocket payments to doctors, dentists, psychiatrists, surgeons, and chiropractors are all eligible for this deduction. More specifically, you can deduct the amount of your total medical expenses that exceeded 7.5% of your adjusted gross income on your Schedule A.¹⁰

Theft and casualty losses

Anyone who experienced destruction, damage, or property loss from a natural disaster, like a flood, volcanic eruption, earthquake, tornado, or hurricane, can claim this deduction. You can also deduct theft losses relating to your home, household items, and vehicles from your federal income tax return.¹¹ Keep track of the amount or cost of the damages and insurance reimbursements if this applies to you.

Miscellaneous deductions

This list of tax deductions to guide you along your tax preparation journey is not exhaustive — there are other miscellaneous costs you can deduct, like unreimbursed employee expenses. An unreimbursed employee expense is a cost that’s both “ordinary” and “reasonable” for your job but was not reimbursed by your employer. It might include costs like work supplies, publications, continuing education, travel, seminars, or uniforms.¹²

Independent contractors, freelancers, business owners, and anyone else who received 1099 income can claim business expense deductions. These may include home office, advertising, or business insurance expenses, to name just a few examples.

Make sure to keep records of all your eligible business expenses for tax write-offs. According to the IRS, you can use any system of record-keeping that works for your business and clearly shows your income and expenses.¹³

If you’re a W-2 employee, the IRS requires your employers to report employee wage and salary information on Form W-2. This form lists all the state, federal, and other taxes retained from your paychecks. This important information helps determine your tax refund, if any.

Self-employed workers, on the other hand, don’t usually have taxes withheld from their payments. Instead, they’re responsible for setting aside money to pay their own taxes. The general recommendation is to set aside 30% to 40% of what you make for taxes.

Plan your quarterly tax payments

Along with setting aside money for taxes, you’ll also need to pay taxes throughout the year if you’re self-employed. In fact, you’re required to pay every quarter if you expect to owe at least $1,000 in taxes.¹⁴

The due dates for quarterly taxes are:

• Quarter 1 – April 15th
• Quarter 2 – June 15th
• Quarter 3 – September 15th
• Quarter 4 – January 15th

To estimate your quarterly tax payments, add up your total tax liability for the year (self-employment, income, and other taxes) and split the total by four.

When in doubt, overpay a little bit since you may be charged a penalty if you don’t pay enough tax by the due date of each payment period.¹⁵

Try to estimate how much you’ll be getting in a tax refund or how much you’ll be paying in taxes. This will help set expectations and empower you to catch any mistakes.

You can get started by figuring out what tax bracket you’re in. Your tax bracket is the tax rate you pay depending on your income. Rates increase at higher income levels.

You can find the adjusted-for-inflation tax rates for 2023 on the IRS website.

When you’ve completed all these tax preparation steps, your last step is filing your taxes with the IRS and your state. You have three choices when it comes to filing your taxes:

1. DIY. You can do it yourself by completing Form 1040 and following the IRS instructions. When you mail the form to the IRS, you’ll also send any payment or taxes you owe.
2. Hire a tax professional who will handle your filing. This route may be preferable if you have a complicated tax situation. However, it tends to be the priciest option.
3. Use tax filing software. Some services are designed for people with non-traditional incomes, so look for an option that fits your needs. It will probably be more affordable than hiring a professional tax preparer, but you may or may not get personalized assistance.

Once you’ve got everything in order, learn more about how to file your taxes online.