Now that tax documents are coming in daily to meet the January 31st deadline, here is a checklist to go through before preparing your tax return for 2011.
Tax Documents You Shouldn't Be Missing-From Yahoo Finance
2011 may already be in your rear-view mirror, but, before saying a final buh-bye to last year, let’s look back and get straight with the IRS. Tax time doesn’t have to be a painful process. As a matter of fact, it’s easier than ever, especially with so much available online. However, there is still one part of the process that’s paperbound—the beginning.
Here are some of the five most important documents to have on hand to start filing your taxes this year:
1. 1040 Tax Return Form
Your 1040 tax return form is where the filing happens. This form describes information about you, the taxpayer, your dependents, and all items as it comes to income. On this form you--or your tax-preparing software--calculate your tax deductions as well as your tax credits and show what funds have already been withheld from your earnings. This is also where you’ll eventually complete how much tax is due (or refund!) given your adjusted gross income (your “AGI”).
2. W-2 Form
For full-time employees, the W-2 is what you need to pull out of your mail pile and have on hand.
This form lists your total earnings from each employer as well as what was deducted already from your paycheck, such as taxes withheld and healthcare premiums, for the year. If you’re a part-time worker or freelancer you’ll get a W-9 with similar information.
3. 1099 Forms
1099 forms are also tied to income but very different kinds. You’ll get a 1099 for interest earnings (such as from a savings account), as well as for investment earnings, any capital gains you made from buying, holding then selling stocks or other investments. Or, if you’re incorporated as a small business owner or independent contractor, this is how your payments get reported to the IRS as well. Have all of these on hand when you’re ready to file.
4. Mortgage Statement
Now that income statements are out of the way, don’t forget those mortgage statements. Mortgage statements show how much principal you paid toward your mortgage and just as importantly, how much you paid in mortgage interest. That interest is one of the biggest tax deductions that homeowners have.
5. 2010 Tax Returns.
Lastly, you’ll have to go back in time one more time and pull out your 2010 tax returns and copies of any additional payments you may have made. You’ll need all this to refer to when filling out your 2011 tax return.
2) In the Markets today:
Stocks fell, surrendering early gains, after a wave of disappointing economic data offset strong earnings from blue chips and the Federal Reserve's pledge to hold down interest rates.
January rally interrupted as buyers pull back-From Reuters
A month-long rally on Wall Street appears to be sputtering as stocks slipped on Thursday in what investors called a possible warning of weakness ahead.
Weaker-than-expected home sales figures and a group of mixed earnings reports tempered the market's recent buying interest.
With the S&P 500 up nearly 5 percent for the year, analysts said the market was due for a pullback.
Wall Street has advanced in recent weeks as U.S. data raised expectations the economic recovery was picking up steam.
"This market is tired and overbought, and we're seeing the results of that today," said Larry McMillan, president of McMillan Analysis Corp.
"After yet another knee-jerk rally on moderately positive economic news, the buyers are out of gas," McMillan said.
Stocks began higher, helped by the Federal Reserve's vow on Wednesday to keep interest rates near zero at least until the end of 2014, a support for buying of risky assets.
But gains were short-lived and the market turned lower in the morning. The Dow's losses were limited by Caterpillar Inc (NYSE:CAT - News), which rose 2.1 percent to $111.31. The heavy equipment maker posted a jump in quarterly earnings that far exceeded Wall Street expectations.
Housing-related stocks led the reversal after sales of new single-family homes fell for the first time in four months in December. It followed Wednesday's soft pending home sales report and dented optimism that housing may have reached a bottom.
Toll Brothers Inc (NYSE:TOL - News) lost 5 percent to $22.07. The PHLX housing sector index (Nasdaq:^HGX - News) declined 1.3 percent.
Banks, which stand to benefit from a recovery in housing, also fell. The KBW Bank index (Philadelphia:^BKX - News) dropped 2.2 percent. SunTrust Banks Inc (NYSE:STI - News) shed 5.2 percent to $20.50 after Deutsche Bank lowered its rating on the stock.
AT&T Inc (NYSE:T - News) posted a $6.7 billion quarterly loss, in part on a break-up fee for its failed T-Mobile USA merger. The shares fell 2.5 percent to $29.45 and were the primary reason the telecom sector was the worst of the S&P's 10 sectors.
The Dow Jones industrial average (DJI:^DJI - News) was down 22.33 points, or 0.18 percent, at 12,734.63. The Standard & Poor's 500 Index (SNP:^GSPC - News) was down 7.60 points, or 0.57 percent, at 1,318.45. The Nasdaq Composite Index (Nasdaq:^IXIC - News) was down 13.03 points, or 0.46 percent, at 2,805.28.
Stocks also rose early after data showed orders for durable manufactured goods rose more than expected in December, while unemployment benefit claims last week rose only moderately.
3M Co (NYSE:MMM - News), a conglomerate with operations throughout the economy, also supported the Dow after it reported higher-than-expected quarterly earnings as demand from industrial and transport markets offset weak sales to makers of consumer electronics. The shares rose 1.2 percent to $87.58.
This is one of the busiest weeks of earnings season, with 117 S&P companies expected to report. According to Thomson Reuters data, 59 percent of the 152 companies in the S&P 500 that have reported earnings beat analysts' forecasts, down from the 70 percent beat rate in recent quarters at this stage.
Amgen Inc's (NasdaqGS:AMGN - News) shares fell 1.6 percent to $68.08 and weighed on the Nasdaq after the world's largest biotechnology company said it would pay more than $1 billion to buy Micromet Inc (NasdaqGS:MITI - News), a deal that would give it access to the company's novel cancer treatment technology.
Micromet's shares jumped 32.1 percent to $10.94 and were the most heavily traded on Nasdaq.
About 7.9 billion shares exchanged hands on the New York Stock Exchange, NYSE Amex and Nasdaq on Thursday.
3) Top financial story of the day:
More people seek unemployment aid, though increase isn't enough to disrupt downward trend
Unemployment claims rise, but so do orders for durable goods-From USA Today
The number of people seeking unemployment benefits rose last week to a seasonally adjusted 377,000, after a nearly four-year low the previous week. The long-term trend is pointing to a healthier job market.
And two other reports gave cause for some optimism:
• A gauge of future economic activity posted an increase for December, providing evidence the economy was gaining strength as the year ended. The Conference Board says its index of leading economic indicators rose 0.4% last month following a revised 0.2% increase in November and a revised 0.6% gain in October.
• The Commerce Department said orders to factories for durable manufactured goods increased 3% in December, the second straight monthly gain.
Perhaps the best evidence of that was a 2.9% increase in so-called core capital goods, such as computers and machinery. That pushed total orders for the category to a record $68.9 billion.
Economists pay most attention to so-called core capital goods because they are often viewed as a good way of gauging business investment plans.
Applications for unemployment benefits have been trending downward the past few months. Just two week ago, applications had plummeted to their lowest level since April 2008. And the average has fallen about 9% since Oct. 1.
But the week ending Jan. 21, initial claims increased 21,000, the Labor Department said Thursday. The four-week average, a less volatile measure, fell to 377,500, the government added.
Unemployment applications have been particularly volatile this month because employers have cut temporary workers hired for the holidays. The department adjusts for seasonal trends. But doing so accurately can be difficult.
Applications generally need to fall consistently below 375,000 to signal that hiring is strong enough to lower the unemployment rate.
Hiring improved in the second half of last year. In December, employers added 200,000 jobs, and the unemployment rate fell to 8.5% — the lowest level in nearly three years.
Economists forecast that the nation will gain about 160,000 jobs per month in 2012, according to a survey of economists by the Associated Press. That's up from an average of about 135,000 last year.
A better outlook for job growth has coincided with other signs of improvement in the economy.
Factory output jumped in December and consumer confidence and spending have risen. Even the battered housing market has shown some signs of slight improvement.
Still, the Federal Reserve said Wednesday that it expects growth to remain modest this year. And it forecasts only gradual declines in the unemployment rate.
The Fed predicts the unemployment rate could fall as low as 8.2% by the end of 2012. Growth will be modest: The Fed expects the economy to expand 2.5% at an annual rate this year.
The job market has a long way to go before it fully recovers from the damage of the Great Recession
Growth could slow this year. Europe is almost certain to fall into recession because of its financial troubles. And wages aren't keeping up with inflation. That makes it harder for consumers to spend more, potentially limiting growth.
Manufacturing has been a bright spot in the current recovery. U.S. factory activity has been lifted a surge in exports but economists are worried that the growth in exports could falter if overseas markets, such as Europe, show signs of slowing. Europe accounts for about one-fifth of U.S. exports.
Durable good orders have climbed more than 45% since hitting a recession low in April 2009. That has kept factories busy and helped the economy grow at a slow but steady pace.
Businesses cut back on core capital goods in November for the second straight month, which drew some concerns from economists. The Federal Reserve on Wednesday also cited the decline while warning that the economy remains vulnerable.
But December's increase in total durable goods orders bolstered the view sketched by other data showing the economy picked up in recent months. Companies are hiring more, factories are making more goods and more people are buying cars.
4) Quote of the Day from Dave Ramsey.com:
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