{"id":14052,"date":"2018-12-07T08:00:46","date_gmt":"2018-12-07T14:00:46","guid":{"rendered":"https:\/\/taxprocenter.proconnect.intuit.com\/?p=14052"},"modified":"2018-11-28T10:36:52","modified_gmt":"2018-11-28T16:36:52","slug":"on-the-record-getting-your-clients-tax-data-in-order","status":"publish","type":"post","link":"https:\/\/accountants.intuit.com\/taxprocenter\/tax-law-and-news\/on-the-record-getting-your-clients-tax-data-in-order\/","title":{"rendered":"On the Record: Getting Your Clients\u2019 Tax Data in Order"},"content":{"rendered":"

Your office is probably geared up and ready for tax season. Your tax software is installed and ready to go. Your tax pros are up to speed on the latest tax developments. However, there\u2019s one thing still missing \u2014 that all-important tax data that will allow you to prepare accurate, complete and timely tax returns for your clients.<\/p>\n

You may have sent tax data organizers to your clients well in advance of tax season, but now is a good time for a quick brush up \u2014 for both you and your clients \u2014 on the tax records that will be needed to substantiate the amounts reported on the 2018 tax return.<\/p>\n

Tax records fall into three basic categories:<\/p>\n

Income<\/strong><\/p>\n

The majority of taxpayers will receive an annual statement of wages from their employers on Form W-2. This statement shows gross wages and deductions from their pay for Social Security and Medicare taxes, as well as both pre-tax and after-tax voluntary deductions for items such as health insurance or union dues.<\/p>\n

Self-employed taxpayers will not receive Form W-2. They should receive Form 1099-MISC for payments of $600 or more for services performed in the course of a client\u2019s or customer\u2019s trade or business. (Attorney\u2019s fees paid in the course of a trade or business must be reported on Form 1099-MISC regardless of the amount.) Under current rules, self-employed and business clients who accept credit cards will receive reports of those transaction on Form 1099-K.<\/p>\n

However, payments for services that are not connected with a client\u2019s or customer\u2019s trade or business or charged to a credit card are not required to be reported. Therefore, the onus is on the self-employed taxpayer to keep track of payments received, and a good recordkeeping system is key. Moreover, a slipshod recordkeeping system may lead the IRS to question the accuracy of the taxpayer\u2019s reported income.<\/p>\n

Your clients may also have income from investments that may be reported to them on a variety of forms. These may include brokerage statements, mutual fund statements, bank statements, Forms K-1 from partnerships or S corporations, and 1099 forms.<\/p>\n

Personal Deductions and Credits<\/strong><\/p>\n

A taxpayer\u2019s records should back up the purpose and amount of each expense for which a deduction or credit is claimed, and include proof that the payment was made.<\/p>\n

Special substantiation requirements apply to some common deductions and credits. For example:<\/p>\n