What financial documents are essential for tax preparation?

The correct choice highlights crucial documentation required for tax preparation because W-2 forms, 1099s, and receipts for deductible expenses directly relate to income reporting and tax deduction claims.

W-2 forms are provided by employers and detail the income earned and taxes withheld throughout the year, making them vital for filing accurate income tax returns. Similarly, 1099 forms are used to report various types of income, including freelance earnings or interest income, ensuring that all sources of income are accounted for when preparing taxes.

Receipts for deductible expenses are equally important as they support claims for deductions on the tax return, such as business expenses, medical bills, or charitable contributions. Having this documentation not only helps in preparing taxes accurately but also serves as proof in case of an audit by tax authorities.

Other choices, while they may provide useful information concerning an individual’s financial situation, do not specifically cater to the primary needs for tax preparation. Bank statements might help in tracking transactions, and loan agreements can assist in understanding liabilities, but they are not essential for reporting income or claiming deductions.