Tax Information

Required documents to keep on file:

• Copies of Driver’s License or State IDs
• Social Security Cards
• Proof of Residence for dependents claiming EIC

Income documents:

• Income from jobs: forms W-2 for you and your spouse
• Investment income—various forms 1099 (-INT, -DIV, -B, etc.), K-1s, stock option information
• Income from state and local income tax refunds and/or unemployment: forms 1099-G
• Taxable alimony received
• Business or farming income—profit/loss statement, capital equipment information
• If you use your home for business—home size, office size, home expenses, office expenses
• IRA/pension distributions—forms 1099-R, 8606
• Rental property income/expense—profit/Loss statement, rental property suspended loss information
• Social Security benefits—forms SSA-1099
• Income from sales of property—original cost and cost of improvements, escrow closing statement, cancelled debt information (form 1099-C)
• Prior year installment sale information—forms 6252, principal and Interest collected during the year, SSN and address of payer
• Other miscellaneous income—jury duty, gambling winnings, Medical Savings Account (MSA), scholarships, etc.

Other tax documents:

• IRA contributions
• Energy credits
• Student loan interest
• Medical Savings Account (MSA) contributions
• Moving expenses (for tax years prior to 2018 only)
• Self-employed health insurance payments
• Keogh, SEP, SIMPLE and other self-employed pension plans
• Alimony paid that is tax dedcutible
• Educator expenses
• State and local income taxes paid
• Real estate taxes paid
• Personal property taxes—vehicle license fee based on value
• Estimated tax payment made during the year, prior year refund applied to current year, and any amount paid with an extension to file.
• Direct deposit information—routing and account numbers
• Foreign bank account information—location, name of bank, account number, peak value of account during the year

Tax deduction documents:

• Advance Child Tax Credit payment
• Child care costs—provider’s name, address, tax id, and amount paid
• Education costs—forms 1098-T, education expenses
• Adoption costs—SSN of child, legal, medical, and transportation costs
• Home mortgage interest and points you paid—Forms 1098
• Investment interest expense
• Charitable donations—cash amounts and value of donated property, miles driven, and out-of-pocket expense
• Casualty and theft losses—amount of damage, insurance reimbursements
• Other miscellaneous tax deductions—union dues, unreimbursed employee expenses (uniforms, supplies, seminars, continuing education, publications, travel, etc.)
• Medical and dental expenses

Current rates information provided by Tax Foundation

2023 Tax Brackets Income Tax Brackets and Rates

The tax year 2023 adjustments described below generally apply to tax returns filed in 2024.

The tax items for tax year 2023 of greatest interest to most taxpayers include the following dollar amounts:

• The standard deduction for married couples filing jointly for tax year 2023 rises to $27,700 up $1,800 from the prior year.
• For single taxpayers and married individuals filing separately, the standard deduction rises to $13,850 for 2023, up $900.
• For heads of households, the standard deduction will be $20,800 for tax year 2023, up $1,400.
• Marginal Rates: For tax year 2023, the top tax rate remains 37% for individual single taxpayers with incomes greater than $578,125 ($693,750 for married couples filing jointly).The other rates are:
  • 35% for incomes over $231,250 ($462,500 for married couples filing jointly);
  • 32% for incomes over $182,100 ($364,200 for married couples filing jointly);
  • 24% for incomes over $95,375 ($190,750 for married couples filing jointly);
  • 22% for incomes over $44,725 ($89,450 for married couples filing jointly);
  • 12% for incomes over $11,000 ($22,000 for married couples filing jointly).

Table 1. In 2023, the income limits for all tax brackets and all filers will be adjusted for inflation and will be as follows:

Standard Deduction and Personal Exemption

The standard deduction will increase by $900 for single filers and by $1,800 for joint filers.

The personal exanption for 2023 remains at $0 (eliminating the personal exemption was part of the Tax Cuts and Jobs Act of 2017 (TCJA).

Table 2. 2023 Standard Deduction.

Alternative Minimum Tax

The Alternative Minimum Tax (AMT) was created in the 1960s to prevent high-income taxpayers from avoiding the individual income tax.

This parallel tax income system requires high-income taxpayers to calculate their tax bill twice: once under the ordinary income tax system and again under the AMT.

The taxpayer then needs to pay the higher of the two.

The AMT uses an alternative definition of taxable income called Alternative Minimum Taxable Income (AMTI).

To prevent low- and middle-income taxpayers from being subject to the AMT, taxpayers are allowed to exempt a significant amount of their income from AMTI.

However, this exemption phases out for high-income taxpayers.

The AMT is levied at two rates: 26 percent and 28 percent (Table 3).

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Table 3. 2023 Alternative Minimum Tax Exemptions

In 2023, the 28 percent AMT rate applies to excess AMTI of $220,700 for all taxpayers ($110,350 for married couples filing separate returns).

AMT exemptions phase out at 25 cents per dollar earned once AMTI reaches $578,150 for single filers and $1,156,300 for married taxpayers filing jointly.

Table 4.  2023 Alternative Minimum Tax Exemptions – Phaseout Thresholds

Business Documents To Keep For One Year

• Correspondence with Customers and Vendors
• Duplicate Deposit Slips
• Purchase Orders (other than Purchasing Department copy)
• Receiving Sheets
• Requisitions
• Stenographer’s Notebooks
• Stockroom Withdrawal Forms

Personal Documents To Keep For One Year

• Bank Statements
• Paycheck Stubs (reconcile with W-2)
• Canceled checks
• Monthly and quarterly mutual fund and retirement contribution statements (reconcile with year end statement)

Business Documents To Keep For Three Years

• Employee Personnel Records (after termination)
• Employment Applications
• Expired Insurance Policies
• General Correspondence
• Internal Audit Reports
• Internal Reports
• Petty Cash Vouchers
• Physical Inventory Tags
• Savings Bond Registration Records of Employees
• Time Cards For Hourly Employees