7 Investment Questions for Tax Season

investment questions tax seasonWith tax season in full swing there are several areas where having the right information can be very beneficial in making sure your taxes are done right and on time. Regarding investments here are some questions that will help both you and your tax preparer:

1.  Did you or your spouse have any debts canceled, forgiven, or refinanced? Such as mortgages on property.

2. Did you or your spouse sell an existing business, rental property, farm, or acquire any new interest in any partnership or S corporation?

3. Did you or your spouse sell, exchange, or purchase any real estate?

4. Did you or your spouse receive any grants of stock options from your employer, exercise any stock options granted to you or dispose of any stock acquired under qualified employee stock purchase plans?

5. Did you or your spouse engage in any options put or call transactions? Most options are sold on exchanges and information should be readily available on specific transactions.

6. Did you or your spouse close any open short sale transactions? Opening a short position is when you borrow stock and sell it without owning to establish the position and closing it is when you buy it back to eliminate the short position.

7. Did you or your spouse sell any securities not reported on Form 1099-B? Such as partnerships that require reporting on K-1’s for its partners for tax purposes.

My accountants and I go over these questions every year because for the most part we engage in many of them if not all of them in any given tax year. Having explanations of the transactions, closing documentation, statements and trade confirmations can greatly help reduce issues when filing your returns. Also, if you are working with financial advisors who charge a fee for their advice and management these fees are generally deductible to the extent that the cumulative total exceeds 2% of adjusted gross income. These are called Tier II Miscellaneous Itemized Deductions. Lastly, expenses related to the determination of your tax liability fall under these Tier II Miscellaneous Itemized deduction rules as well.

To learn more about James Liotta, view his Paladin Registry profile.  

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