The question was asked of a forester, “what is the best time to plant a tree?” The answer was 40 years ago. The second best time to plant a tree is today.
So what is my point? Now that Iowa tax season is behind us, it is appropriate to take time and reflect on how we could have made the process of gathering income tax information less stressful.
Gathering information on the income-side is relatively easy. That information is sent to you by a payer of interest or dividends, a K-1 from a partnership or Sub-S Corporation or some other financial entity that maintains a record of income being paid to you. If you are selling a piece of real estate on contract, you will need to maintain a record of the principal and interest payments to report capital gain income and interest income to be compliant with Iowa tax law.
The deduction-side of the Iowa income tax return appears to me to be the most difficult to maintain and sustain. In order to make the year 2015 Iowa income tax return easier to prepare for, it is important to keep track of your itemized deductions on a monthly basis rather than trying to reconstruct or reassemble your itemized deductions in the first quarter of 2016.
If you itemize deductions, review your year 2014 itemized deduction schedule. That will help you focus on the deductions you need to maintain on a monthly basis.
If you are selling real estate, buying real estate or refinancing real estate, keep a copy of the Settlement Statement (also known as the HUD Statement).
The motto regarding real estate is “location, location, location.” In Iowa tax matters, the motto is “keep good records, maintain good records, keep good records, maintain good records and do it over and over again each month.”
For over three decades, Beatty and Miller, P.C. has been consulting, advising and guiding our clients through the challenges of Iowa tax preparation and management. If you’re in need of a proven, successful Iowa tax lawyer, or help with tax preparation, click on the “Contact Us” tab at the top of the page or just give us a call at 515-225-1100. We look forward to hearing form you.
– by Ned P. Miller