Ep. 302 – 2024 Tax Filing Made Easy – Key Documents & Expert Filing Tips

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In this episode of the Secure Your Retirement Podcast, Radon and Murs discuss tax season preparation with their in-house tax strategist, Taylor Wolverton. As tax season approaches, understanding your tax documents and making informed filing decisions can help reduce stress and ensure accuracy. Taylor shares expert insights on essential documents, filing strategies, and common tax mistakes to help make tax filing easy and efficient. Whether you’re planning retirement tax strategies or determining how to file taxes effectively, this episode will help you navigate tax season with confidence.

Listen in to learn about the different IRS tax forms you should expect, including W-2 and 1099 forms, and how to differentiate between standard vs. itemized deductions. Taylor also covers the significance of Qualified Charitable Distributions (QCDs) in retirement planning and how they impact your tax filing. Get valuable tips on avoiding common tax mistakes and ensuring all necessary documents are included in your tax filing checklist. This episode is packed with expert filing tips to help you retire comfortably and secure your retirement.

In this episode, find out:

• The key tax documents you need for tax season preparation, including IRS tax forms like W-2, 1099, and 1099-R.
• The difference between standard vs. itemized deductions and how to determine the best option for you.
• The importance of Qualified Charitable Distributions (QCDs) for retirement tax planning and how to report them correctly.
• Common tax mistakes to avoid when filing your return.
• Best practices for organizing and storing tax documents to streamline future filings.

Tweetable Quotes:

• “The IRS receives all your tax forms, so ensuring accuracy in your tax filing is crucial to avoid unnecessary headaches.” – Radon Stancil
• “If you made a Qualified Charitable Distribution (QCD), make sure to report it correctly—your 1099-R won’t automatically show it as tax-free!” – Murs Tariq

Resources:

If you are in or nearing retirement and you want to gain clarity on what questions you should be asking, learn what the biggest retirement myths are, and identify what you can do to achieve peace of mind for your retirement, get started today by requesting our complimentary video course, Four Steps to Secure Your Retirement!

To access the course, simply visit POMWealth.net/podcast.

Here’s the full transcript:

Radon Stancil: So it’s time to file your taxes. What do you need to know? In this episode, we go through all the different documents, all the different things to think about as you get ready to file for 2024. It is a must-listen-to episode. We hope you’ve been enjoying all the episodes from Secure Your Retirement. If you’d like to keep learning and receiving these episodes, hit the subscribe button and the bell so you receive alerts when they come out. We’ve helped thousands of listeners get on the path to securing their retirement. Now it’s your turn. Let’s dive in.

And if we ever have the privilege of doing so, we always like to have somebody who really knows everything about this topic. So we invited Taylor Wolverton, who is in the office. She’s our in-house tax specialist.

So thank you very much, Taylor, for coming on board and having a conversation with us about getting ready for tax season.

Taylor Wolverton: Yeah, you’re welcome.

Radon Stancil: Yeah, there’s a lot of things to think through. And I think getting ready for taxes can make people anxious because sometimes you just don’t know what you’re supposed to do. It feels a bit overwhelming. And you hear all these stories that the IRS is out to get us—but that’s probably not the real truth. They do want their money, but they would just love for us to be able to give everything that we need to get together to do this.

So we’re gonna get it started. I’ll let Merce kick things off for us. You know, right around this time of year is when you’re getting all those things in the mail—tax documents, paystubs, W-2s—all these different things, and people get overwhelmed.

So, Taylor, could you just walk us through the documents that people should be collecting, either for their tax preparer or for themselves if they’re doing their taxes on their own?

Taylor Wolverton: Yes. So there are a lot. Starting out with a common one I’m sure everyone has experience with—if you’re employed at any point during the year, you’ll receive a W-2 from your employer showing your wages and things like that associated with that job.

Then we also have forms of investment income. If you had interest, dividends, or if you sold any securities, there are multiple forms associated with that. For example, the 1099-INT for interest, the 1099-DIV for dividends, and the 1099-B for capital gains or losses.

For Charles Schwab, they combine all of those together and call it the 1099 Composite. So if you have investment accounts, you might see something like that as well.

Murs Tariq: Hey, can you real quick, when you say INT or DIV, could you just tell us what that’s actually looking at?

Taylor Wolverton: Yeah, so first, the 1099-INT reports interest. If you have a high-yield savings account, money market account, or CD earning interest throughout the year, your bank or financial institution will issue you that form.

Similarly, the 1099-DIV is for dividends. If you had investments that paid dividends, those will be reported on that form.

And then the 1099-B is for capital gains or losses realized on the sale of securities throughout the year. If you have an investment account where you received interest, dividends, and had capital gains, then you might receive a 1099 Composite, which combines everything into one form.

Radon Stancil: And by the way, I will say this—a few years ago, I completely forgot to get that 1099 from my brokerage account. Then I got a nasty letter from the IRS saying, “Hey, you owe us a lot of money.”

In reality, I didn’t owe them that much. They just assumed all of it was a gain. We had to go back and fix it. So if you have any of these accounts and don’t receive a 1099, maybe reach out and ask, “Where’s my 1099?”

Taylor Wolverton: Yes, the 1099 Composite applies only to taxable brokerage accounts. Traditional IRAs and Roth IRAs are different. For those, if you took distributions, you’ll receive a 1099-R for retirement income.

Also, any form you receive, the IRS also receives. If something doesn’t match what they expect, that’s when they send out those letters.

Murs Tariq: Yeah, those are the “nasty grams” from the IRS because they compare what they have on file with what’s reported on your return.

Taylor Wolverton: Yes, exactly. And if you did a 401(k) rollover, you’ll receive a 1099-R. It’s not a taxable event if done correctly, but that form just shows the distribution occurred.

For Social Security benefits, you’ll receive an SSA-1099. And if you had an HSA, you’ll get a 1099-SA for health savings account distributions.

We also have the 1098 for mortgage interest and K-1s for partnership or trust income. If you expect a K-1, be careful—those often come later than 1099s, sometimes in March or April.

Radon Stancil: Yes, and if you file early and then get a K-1 later, you’ll have to amend your tax return.

Now, let’s transition. Taylor, can you explain the difference between itemized deductions and the standard deduction?

Taylor Wolverton: Yes. The standard deduction is an amount of income that isn’t taxed. For 2024, it’s $30,000 for married filing jointly. It also increases if you’re over 65 or blind.

Itemized deductions include medical expenses, state and local taxes, property taxes, mortgage interest, and charitable donations. If these add up to more than the standard deduction, then it makes sense to itemize.

Murs Tariq: Okay, and one deduction we talk about often is the Qualified Charitable Distribution (QCD) from an IRA. What should someone do if they made a QCD?

Taylor Wolverton: Yes, I’m very passionate about this! If you made charitable donations directly from your IRA, your 1099-R won’t indicate that it was a QCD. You must tell your tax preparer to ensure the amount is marked as non-taxable.

Radon Stancil: That’s a great point. And Taylor, you don’t file tax returns, but you help with tax strategy. What’s your opinion on self-preparing taxes versus hiring a professional?

Taylor Wolverton: If you have self-employment income, rental properties, or partnerships, I recommend hiring a professional. Some of those tax forms can be complex, and a tax preparer ensures you aren’t missing deductions. Plus, if you just don’t want to deal with it, it’s worth the peace of mind.

Murs Tariq: Yes! I personally don’t want to deal with it. That’s why I use a professional.

Before people start shredding their documents, how long should they keep them?

Taylor Wolverton: The general rule is to keep tax documents for at least three years. The IRS has a three-year statute of limitations for audits. If you have cost basis records for investments, it’s good to keep those longer.

Radon Stancil: Alright, well, before we lose our audience talking about taxes for too long—Taylor, any final thoughts?

Taylor Wolverton: Yes! If you’re eligible for QCDs in 2025, consider using them. And for estimated tax payments, remember the due dates: April 15th, June 16th, September 15th, and January 15th of 2026.

Radon Stancil: Taylor, thank you so much. Taxes can be frustrating, but we appreciate you making it clear for us.

We hope you enjoyed this episode of Secure Your Retirement. For more, check out our online course, Three Keys to Secure Your Retirement, at POMWealth.net. Also, don’t forget to subscribe to our podcast and YouTube channel for more retirement tips!