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Preparing for Tax Season and Document Retention

Posted by Busey Bank on Jan 18, 2023 8:15:00 AM
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A new year is a good time to start thinking about what you'll need to do before filing your taxes. It should come as no surprise that many Americans find filing taxes a daunting task. Planning ahead can help you file an accurate return and avoid processing delays that can slow down your tax refund. If you find yourself overwhelmed by thinking about your taxes, consider these tips as we break down the prep-work into bite-sized pieces.

A man's hands are seen as he looks at papers and his calculator.

Gather and organize your paperwork

Whether you do your own taxes or use tax professionals, you can't file your taxes if you don't have all of your important documents. Gathering and organizing tax documents can be easy when you know exactly what to look for.

There are generally five major categories on a tax return—income, adjustments, deductions and credits, taxes paid and other information. Start with the items applicable to you in each category and then determine the specific documents you’ll need to complete your taxes.


Remember, most income is taxable. Gather all the documents that confirm the money you received during the year, including:

  • Wages: Forms W-2 from your employer(s)
  • Investment income: Forms 1099 (-INT, -DIV, -B, etc.), K-1s, stock option information
  • Income from partnerships, S corps, trusts and estates: Schedule K-1s
  • Income from the gig economy: 1099-MISC, 1099-NEC or other income statements
  • Form 1095-A, Health Insurance Marketplace Statement
  • Social Security benefits: Forms SSA-1099
  • IRA/pension distributions: Forms 1099-R
  • Rental property income/expense: profit/loss statements, rental property suspended loss information
  • Business or farming income: profit/loss statement, capital equipment information
  • Income from sales of property: original cost and cost of improvements, escrow closing statement, information (Form 1099-C)
  • Income from state and local income tax refunds and/or unemployment: Forms 1099-G
  • Other income documents and records of digital asset transactions: Form 1099-K

Other miscellaneous income information may include alimony, jury duty, gambling winnings, cancelled debt and Medical Savings Account (MSA) to name a few.

Adjustments to Income and Deductions

Certain adjustments to income can help you reduce your taxable income, such as educator expenses, student loan interest, alimony payments, Individual Retirement Account (IRA) contributions, Health Savings Account (HSA) contributions or self-employed health insurance premium payments. You do not need to itemize your deductions to take advantage of these adjustments.

The standard deduction for tax year 2022 is $25,900 for married couples filing jointly and $12,950 for single taxpayers and married individuals filing separately. For most people, it might be more beneficial to take the standard deductions and avoid the hassle of collecting receipts. However, if you have substantial medical bills, mortgage interest or charitable contributions, itemized deductions might help you save more money.

Tax Credits

While taking advantage of adjustments and deductions reduces your taxable income, taking advantage of credits reduces your total tax bill dollar for dollar. If you are uncertain about what tax credits apply to you, you can use the Interactive Tax Assistant on to determine your eligibility. Here’s a rundown of some of the most common tax credits:

  • Child Tax Credit
  • Child and Dependent Care Tax Credit
  • Education credits American Opportunity Tax Credit, Lifetime Learning Credit
  • Foreign Tax Credit
  • Adoption Credit
  • Earned Income Tax Credit
  • Saver’s Credit
  • Residential Energy Credit

Taxes you’ve paid

Properly documenting the taxes you’ve already paid can keep you from overpaying or help you avoid underpayment penalty. If you are employed, there is likely federal or state income tax withheld from your paychecks. Your W-2 will show the total amount you’ve paid in 2022. Also keep records for estimated tax payments made during the year, prior year refund applied to current year, and any amount paid with an extension to file.

Other information

Did you receive any IRS or other agency letters? Keep them! They might be important for preparing your current year’s tax return.

You must have a valid Individual Tax Identification Number (ITIN) or Social Security Number to file a tax return. If you are a confirmed victim of identity theft, you will receive a CP01A Notice with your new IP PIN each year. You will need the IP PIN to file your tax return successfully. If you don’t already have an IP PIN, you may get an IP PIN as a proactive step to protect yourself from tax-related identity theft.

How long should I keep my tax records?

You should keep records, such as receipts, canceled checks and other documents that support an item of income, a deduction or a credit appearing on a return.

The IRS recommends keeping copies of your tax returns and all supporting documentation for a minimum of three years after the date of filing. Generally, the IRS has three years from the filing date or due date of the return (whichever is later) to assess an additional tax. Likewise, you also have three years or two years after tax was paid to file any claims for credit or refund.

You want to keep the documents longer than three years if you maintained employment tax records, filed a claim for a loss from worthless securities, or underreported your income. If you do not file a return each year or have filed fraudulent returns, you should keep the records indefinitely. Records related to property should be kept until the year in which you dispose of the property. In a taxable disposition, you will need these records to calculate your cost basis when computing gain or loss.

Good record keeping doesn’t mean that you have to save every receipt or hold on to every document indefinitely because you “might need it someday.” You can discard documents no longer needed for taxes or other purposes—shredding is recommended before recycling them.

Going paperless allows more flexibility with the filing system. Digital files must be stored in a secure place. If you choose online storage, make sure your online storage provider encrypts your data, so you are not at the risk of identity theft. According to the IRS, digital records must be reproducible “in a legible, readable format” and that retention requirements for paper records apply equally to digital records.

While tax season can be a stressful time, keeping good records and having all of the necessary documents on hand can make the process go more smoothly.

Whatever your financial needs, our experts have the knowledge and experience to provide you with trusted advice and tailored solutions. Learn more by visiting

This is not intended to provide legal, tax or accounting advice. Any statement contained in this communication concerning U.S. tax matters is not intended or written to be used, and cannot be used, for the purpose of avoiding penalties imposed on the relevant taxpayer. Clients should obtain their own independent tax advice based on their particular circumstances.

This material is provided for educational purposes only and should not be construed as investment advice or an offer or solicitation to buy or sell securities.

This presentation is for general information purposes only. It does not take into account the particular investment objectives, restrictions, tax and financial situation or other needs of any specific client.

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