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Smart Money

The Ultimate Tax Preparation Checklist

Does filing your taxes make you feel overwhelmed? Check out the ultimate tax preparation list by the tax experts at Keeper Tax to help reduce time and stress.

Brandon Leuangpaseuth • December 20, 2021

In This Article

  1. Prep the Important Paperwork
  2. Get Your Deductions In Order
  3. Don’t Forget Business Expense Deductions!
  4. Set Money Aside To Pay For Your Taxes
  5. Estimate Out How Much You’ll Owe (Or Get Back)
  6. Plan Your Quarterly Tax Payments
  7. File Your Taxes!

This is a guest post by one of our partners, Keeper Tax. This post contains partner affiliate links. For more information on how we work with partners, see disclosures at the bottom of this page. 


For most, the idea of filing taxes isn’t exactly fun. But there are tons of benefits to planning ahead. It could help you get the most out of your tax refund or — if you’re self-employed — get bigger tax savings with write-offs.

Take a look at this tax preparation checklist for tips for how to save time and money when tax season rolls around.

Prep the Important Paperwork

No matter who does your taxes, you need to have all your files and forms together before getting started. Here’s a breakdown of what to prepare:

Personal Information

The IRS requires you to show who’s filing and who is covered in your tax return. To do that, you’ll need the Social Security Numbers and the dates of birth for yourself, your spouse, and all your dependents. (Remember, dependents can include elderly parents and non-family members living in your household.)

Income Documents

After organizing all your personal info, you can start gathering all the documents that verify the money you made in 2021. These documents can include:

  • W-2 income: If you’re a traditional employee, your employer will have to send you a W-2 by January 31st.
  • All the 1099 forms: Different kinds of 1099 forms report the income you earned as a nonemployee. For example, the 1099-NEC is for contracting work, 1099-DIV is for dividends, and the 1099-MISC is for miscellaneous income, like royalties and prize winnings. If you received more than $20,000 in gross income or payment and over 200 separate payments in a calendar year from a third-party payment processor like PayPal, you will receive a 1099-K. (Starting in January of 2022, this reporting threshold will drop to $600, but you won’t have to worry about that until you file your taxes in 2023.) I know they can be confusing, but getting these forms organized will make your tax journey so much smoother!

Get Your Deductions In Order

The government offers a number of different deductions to help people lower their tax bills. If any of the below expenses apply to you, be sure to keep a good record of them.

Donations For Charity 

For 2021, everyone can claim up to $300 in charitable donations on top of the standard deduction. This was part of the 2020 pandemic relief CARES Act, but this deduction is still around. That means everyone can keep benefiting from charitable donations this year.

Charitable donations that count for this deduction include cash or property, miles driven, and various other out-of-pocket costs. 

Noncash donations may require you to keep a description of what you donated, a receipt from the charitable organization, the date and location of the contribution, and its fair market value. Here is a complete breakdown of the charitable donations deduction.

Although charitable donations are great for lowering your taxable income, it should be noted that these deductions typically can’t exceed 60% of your adjusted gross income. 

Child Care Costs

Spending money on a child or any dependent can add up fast. Thankfully, you can qualify for a child care deduction if you paid a daycare center, babysitter, or another other care provider to watch over your child who is under the age of 13. For one child or dependent, you are allowed to claim 35% of qualifying expenses of $3,000, or up to $6,000 for two or more children. Take note of how much you paid, the provider’s name, address, and tax ID.

Home Mortgage Interest

This deduction lets homeowners deduct the interest they pay on any loan used to buy or improve their home. You’ll need the records that track all the interest you paid. You can use form 1098 to take advantage of this deduction. 

Education Expenses

Keep clean records of education expenses, like:

  • Tuition and fees 
  • Student loan interest 
  • Qualified student loan
  • Education expenses (For example, the cost of a textbook bought from an off-campus bookstore is a qualified education expense)
  • Qualifying work-related education, like education required by the employer or by law and education to improve or maintain skills

Non-essential fees like mileage, transportation costs, or room and rent, are not included. You can use Form 1098-T to deduct qualifying education costs.

Investment Interest Expenses

An investment interest expense is any interest you pay on a loan or borrowed money to purchase property for investment purposes. For instance, taking out a loan to buy stocks. 

Here’s how it works: If your expenses are lower than your net investment income, the entire investment interest expense is eligible for a deduction. However, if your interest expenses are greater than the net investment income, you can deduct the expenses equal to the net investment income amount. You’ll need to file a Form 4952 to claim a deduction for your investment interest expense.

Dental and Medical Costs 

Qualified medical and dental expenses are ones you paid during the tax year for yourself, your spouse, or your dependents. You’re permitted to write-off out-of-pocket payments to doctors, dentists, psychiatrists, surgeons, and chiropractors. 

For your 2021 taxes, with this deduction, you’re allowed to deduct the amount of your total medical expenses that exceed 7.5% of your adjusted gross income on your Schedule A. 

Theft And Casualty Losses 

You can deduct a casualty or any destruction, damage, or loss of your property from any sudden, unexpected, or unusual event like a natural disaster (flood, volcanic eruption, earthquake, tornado, hurricane). You can also deduct theft losses relating to your home, household items, and vehicles from your federal income tax return. Keep track of the amount or cost of the damages and insurance reimbursements. 

Miscellaneous Deductions 

There are a lot of different costs you can deduct, like union dues or unreimbursed employee expenses. An unreimbursed employee expense is any cost that is both “ordinary” and “reasonable” that you make for your job and is not reimbursed by your employer. This includes expenses like work supplies, publications, continuing education, travel, seminars, uniforms, etc.

Don’t Forget Business Expense Deductions!

If you received 1099 income from independent contracting, freelancing, or your own business, then you can claim business expense deductions.

Here is a list of common deductions for freelancers. Be sure you keep clear records of all your eligible business expenses for tax deductions. There are many ways you can track your write-offs. This free 1099 excel template is an easy way to manually record your expenses. You can also use a business write-off tracking app like Keeper Tax, which will automatically scan your bank statements and credit card statements to find deductions for you. 

The Myth Of Paper Receipts

If you are a business owner or self-employed worker who plans to itemize your deductions, you should have clean records of your business expenses. But that doesn’t mean you need to hold onto your physical receipts to track eligible expenses. The IRS has caught up with the times and allows business owners to use bank statements as a valid form of proof for tax deductions. So say goodbye to hoarding your paper receipts!

Set Money Aside To Pay For Your Taxes

If you’re working as a W-2 employee, the IRS requires your employers to report wage and salary information for employees on Form W-2. The W-2 would have all the amount of state, federal, and other taxes retained from your paycheck. With every paycheck, you’ll have taxes withheld from each one. The information on your W-2 is important when preparing your tax return because it will determine your tax refund. 

Self-employed workers, who don’t have any taxes withheld from their payments, will need to set money aside for their taxes. The general recommended rule of thumb is to save 30-40% of what you make for paying taxes. Use this free calculator to determine how much money you should set aside for your 1099 taxes.

Estimate Out How Much You’ll Owe (Or Get Back)

It’s a great idea to estimate how much you’ll be getting in a tax refund or how much you’ll be paying in taxes. This is helpful for setting expectations. Plus you’ll likely be able to notice if there’s a mistake.

Use this income tax calculator to see how much you’ll owe the government at the end of the tax year. This tax calculator is always up-to-date on the latest tax laws. 

Plan Your Quarterly Tax Payments

If you do a lot of freelance or independent contracting work, you may have to make estimated tax payments.

You’ll likely have to pay quarterly taxes if you’re self-employed expect to owe at least $1,000 in taxes. This is pretty common for small business owners, freelancers, and independent contractors. 

To calculate how much you’ll make in quarterly tax payments, add up your total tax liability for the year (self-employment, income, and whatever other taxes) and split the total by four. You can also use this free estimated tax calculator to find out how much your quarterly payments should be, and whether you should even make them 

The due dates for quarterly taxes are: 

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

Be careful, because you may be charged an underpayment penalty if you don’t pay enough tax by the due date of each payment period (even if you’re supposed to get a refund when you file your income tax return at the end of the year). 

File Your Taxes!

When you’re ready, the last step is filing your taxes with the IRS and your state. You have three choices when it comes to filing your taxes:

  1. You can do it yourself by completing Form 1040 and following the IRS instructions. When you mail in 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. (Note: This route tends to be pricey.)
  3. Use a tax filing software such as Keeper Tax, which is designed specifically for people with non-traditional income.

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