Believe it or not, April is right around the corner, which means tax season is upon us again!
This year, Tax Day falls on Tuesday, April 18. If you are like many people and have been putting off filing your taxes, here are a few key tips, tricks, and best practices that may just provide the motivation you need to get going.
Keep It Simple & Take It Slow. Start with All the Required Forms.
When it comes to taxes and income in general, everyone's situation is different. There is no "one-size-fits-all" list of documents you'll need to gather to file. Generally speaking, you will need documentation of your income sources, which can include things like:
- A W-2 form for each job you have
- A form 1099-G for unemployment (if applicable)
- Income records if you're self-employed
- Information about any income you derive from rental properties
- Retirement income
- Income from your savings and other investment accounts
You'll also need documentation that supports any deductions you plan on making. This can often include but is not limited to items like:
- Medical expenses
- Health insurance-related expenses
- Childcare expenses
- Any donations that you made to charities throughout the year
To get a better understanding of the types of documents that you may need, review this Tax Prep Documents Checklist.
Familiarize Yourself with What's New This Year
It's important to understand that certain life changes could have an impact on both your refund and your larger tax-filing status in 2023. These include things like:
- Any changes in the number of dependents that you'll be claiming
- Changes in your employment status, or to your self-employment income
- There are no additional stimulus payments to account for as there were in years past
Also note that several tax credits are going to return to their previous levels, so you'll need to plan accordingly. There are also Premium Tax Credit eligibility changes that you must consider when filing. Find out more information about how these and other changes may impact you.
Increase Your Deductions to Reduce Your Taxes
Don’t forget that there is still time to make contributions that will lower your taxes!
- You may still be able to make contributions to a Roth or traditional IRA between now and April 18, 2023. This will give you a much-needed tax reduction - while boosting your retirement savings at the same time.
- If you have a high-deductible health insurance plan provided by your employer, you may still be able to contribute to a qualified HSA or Health Savings Account. This can reduce your adjusted gross income.
- If you work from home full-time or on a hybrid basis, you may qualify for a Home Office Tax Deduction. This is true if you're self-employed and are working out of your home. If you're working remotely but still get a W-2 from your employer, you are not qualified for this deduction.
To get more specific answers to your unique questions, contact a tax professional who can point you in the right direction.
How to File: Breaking Things Down
When it comes to filing your taxes, there are three main options available to you.
- You can fill out an IRS Form 1040 or Form 1040-SR and simply drop it in the mail. This is not recommended however, because it could take six months (or more) for your tax return to be processed.
- You can use tax software. Options include:
- You can work with a tax professional and leverage the power of their years of experience to your advantage
Stay Alert and Avoid Tax Fraud
In an effort to reduce your chances of tax fraud this year, always be on the lookout for warning signs such as:
- Someone claiming to be from the IRS who contacts you via phone or email, instead of through USPS. No official correspondence will ever come in any other way.
- You're being asked to pay a bill with a prepaid debit card or money transfer. No specific payment system will be required.
- You get a suspicious letter in the mail about a tax return you didn't file.
- You get a tax transcript in the mail that you didn't request.
- You're having a hard time e-filing your return because it says a duplicate Social Security number is being used.
If you encounter any of these issues, report it to the IRS directly.
Avoid Tax Time Stress
Stay cool - tax time doesn't have to be stressful. Filing your return as soon as possible is a good way to reduce the tax time anxiety that many of us feel. And, if you're expecting a tax refund, the earlier you file, the earlier you’ll get your money, which is the best incentive to get started! Read our blog about how to use your tax refund wisely.
If you’re looking for additional guidance as you file your taxes, we’re here to help! Contact us at 866-224-1379.