Make tax season easy this year by preparing for your taxes in advance. The smaller tasks that take up the most time and energy like hunting down receipts, getting organized, and planning can be done ahead of time to make filing easier.
As early as January, you can begin with the steps below; Hint: You don’t need your W-2 for any of these steps.
Start by collecting all of your personal information. Make sure you have the social security numbers of everyone in your family and any other dependents, a copy of last year’s tax return, and your bank account and routing number so that you can set up a deposit for your return if you are getting one.
Here are additional documents to look for:
-1099s
-W-2s
-charity receipts
-real estate taxes
-medical bills
-property taxes
-mortgage interest information (1098)
-vehicle licensing fees
-property taxes
-other sources of income
-estimated tax payments
-student loan info
*There are other forms and documents that might pertain to your situation that are not listed. Look at your taxes from last year to help create a list of items you’ll need.
The next step after you have collected everything is to get organized. You can make this step as complicated or simple as you want. It is up to you. The one thing you absolutely need to do is to put everything you collected in one place.
You can purchase an accordion file folder from any local office supply or department store, and create a folder for each year you file. Whenever you a get a new receipt or a relevant document in the mail, immediately add it to the correct folder, starting with this year.
3. Make a plan.
Decide how you will prepare your taxes--on your own or with an agent.
If you’re filing your own taxes, there are many software programs available, but the most popular and widely used is TurboTax. Most programs are inexpensive and just take a small amount from your return. They are very convenient and you can file tax returns from home, usually online
You can also file directly on the irs.gov website for free.
If you prefer to work face-to-face with someone, you could go to a tax filing company. They help you fill out your return, but they aren’t always tax experts, which means they may not always know the best ways to maximize your refund or they may not be able to help if there are errors. For most people, filing yourself is easier. However, these agents often .have deals that make filing with them cheaper than with software programs. You will just have to compare and decide what will work best for you.
Another option is to hire a local Certified Public Accountant (CPA). This is a great option if you want a tax expert working for you to get you the biggest return possible. In fact, we recommend this if you have your own business, lots of complicated investments, or an unusual situation.
Setting up the year ahead
The good news is, as you organize this year’s taxes, you can simultaneously order the year ahead. Update the list of documents with every thing you actually needed to file.
Then as you make purchases or when you sit down to pay bills, you can scan the list of documents to see what you can add to the 2023 folder in your organizer. Even if you’re not sure that it qualifies. Collect it all!
When something tax-related comes in the mail, file it away. A lot of important information is sent to you at the beginning of the new year, so it’s a great time to develop your process.
Also try to keep in mind any significant events or life changes as they happen. Are you expecting a child, getting married, planning a medical procedure, or buying a home? If so, track expenses related to each of those items. If something unexpected comes up, note it, too, in case you can claim it on your taxes. These kind of expenditures may also require additional forms or documentation when you file.
In closing
Whether you’re working on this year’s return, or preparing for the next, keep a note pad handy. In the coming weeks while you’re preparing, make notes or document any questions that you may have when it comes time to file.
Don’t forget our online banking can be a great resource to categorize transactions for better tracking, search transaction history, or download statements. We also have a wealth of other financial topics available on our partner site with Banzai.
You may also be interested in this article, “After Filing Your Taxes (chesbank.com)”