Get Ready for Tax Season

One of the most efficient and effective way to tackle this chore is to use the organizer provided to you by Modera Tax Services.

Modera tax clients should receive a tax questionnaire either as part of their paper organizer or via TaxCaddy. Please complete the tax questionnaire, as the questions help identify any changes or activity that could impact your tax return, as well as address new tax developments. If you have not received your questionnaire yet, please reach out to the Modera Tax Services team. If you are using TaxCaddy, the questionnaire will be ready for you to fill out by February 1.

Here are some additional specific items to note, as you gather your tax information for submission.

Annual Tax Forms

Modera Tax Services has access to your annual tax forms for Modera-managed investment accounts. For any investment or retirement accounts not managed by Modera, please provide us with a copy of these tax forms. Typically, Form 1099 will be mailed to you directly from your custodian; hopefully, by mid-February at the latest. It includes information on dividends and interest, and gain/loss information on securities sold throughout the year. Sometimes corrected 1099s are generated and mailed out later. If you misplace your hard copy of Form 1099, you may access it online at your custodian’s website any time after it has been published, using your regular custodian website credentials.

Foreign Bank Accounts and Virtual Currency

The IRS has specific regulations for reporting foreign financial assets and virtual currency. Please disclose any holdings of these types of funds.

Other Sources of Income

In addition to your investment or retirement income, you may receive a Form W-2 or K-1 that indicates the amount of income reported to the IRS. For other types of income, such as alimony received, you may need to determine the amount to report from bank statements. If you own an interest in a passthrough entity, you should receive Schedule K-1 in mid-March or later. For publicly-traded partnership interests, you can check www.taxpackagesupport.com to see if the information is available. Some K-1s can come as late as mid-September, so an extension may be required. Be sure you’ve received a K-1 for each passthrough entity you own prior to filing your taxes.

Cost Basis on Securities Sold

In most cases, Form 1099 will contain cost basis information. However, if you have sales with no basis reported on Form 1099, you will need to provide this information to your tax preparer.

Adjustments to Income

These are direct reductions to taxable income that commonly include deductible IRA contributions, alimony paid (applies to divorce or separation instruments executed before 1/1/2019), Health Savings Account (HSA) contributions, SEP, SIMPLE or other self-employed pension plan contributions and self-employed health insurance payment records. Please include any documentation you receive relating to these items.

Deductible Expenses

If you itemize deductions rather than taking the standard deduction, you may need to collect source documents indicating the amount of mortgage interest paid (Form 1098), investment interest expense, real estate and personal property taxes paid, medical expenses, and charitable contributions to be reported on Schedule A.

Tax Credits

Tax credits are a direct reduction of your tax bill. You may be able to claim the American Opportunity Credit if you have a child in college, or a Residential Energy Credit if you have made any major “green” home improvements. If you purchased an electric vehicle in 2023, you will want to include any dealer certification that your vehicle qualifies for the “EV” credit. If you obtain health insurance coverage through the Marketplace, please be sure to include a copy of Form 1095-A with your tax documents.

Basis of Property

This is also a good time to review and update the cost basis of investment property and your personal residence. Improvements made during the year may have increased the basis, so collect and file those valuable receipts. You should provide your tax professional with the details of improvements to the investment property. You should keep records of investment purchases or property purchases and improvements for seven years after the investment or property is sold.

Taxes Paid

Federal and state taxes withheld will appear on Form W-2 or 1099, but if you paid quarterly estimated taxes during 2023 you will need to provide information about these payments. Errors in reporting estimated tax payments can result in notices of adjustment from taxing authorities, so you will want to double-check the amounts and dates paid and whether the payments apply to 2023 or another tax year.

Each individual’s tax situation is unique. The list of items above is a good starting point from which you can develop your own document gathering process and one that reflects your unique life circumstances. Start organizing now and maybe – just maybe – tax season won’t be your least favorite season of the year.