Apr 19. 2023

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Couple uses calculator to prepare complete their tax documents

Mark your calendar: Tax Day is Monday, April 15, 2024.

Tax Day isn’t as fun as other holidays, but it is important. Tax Day falls on April 15 or the first following business day. That’s the day federal tax returns—as well as any taxes owed—are due.

It might seem like a long way away, but staying organized all year can help make your tax filing go more smoothly. For example, if you think you will get a refund, you will want to be ready to file so you can use that cash. If you think you’ll owe, it’s best to start planning early.

To prepare for tax season—including Tax Day—follow this six-step tax preparation checklist.

Table of Contents

  1. Determine your filing status
  2. Update your contact information
  3. Gather all your tax documents
  4. Max out your IRA and/or HSA contributions
  5. Consider hiring a tax professional
  6. Check your withholding

1. Determine your filing status

Your filing status determines your tax rate. It also affects which tax deductions and credits you can claim, so it’s important to choose correctly.

There were five options for tax filing status according to the instructions for filing a 1040 for tax year 2022:

  • Single – unmarried people who aren’t supporting a child or dependent adult
  • Head of household – unmarried people who pay at least half their housing costs and support one or more individuals
  • Married filing jointly – married couples who file a joint return
  • Married filing separately – married couples who file separate tax returns
  • Qualifying surviving spouse

You’ll want to consult the IRS website, or a tax professional, to determine if tax filing status changes for tax year 2023.

The IRS has specific rules around who qualifies as a dependent; when married couples can file jointly or separately; and when an adult relative can qualify as a dependent. To determine your filing status, refer to this online questionnaire from the IRS. If you’re still not sure, consult a tax professional.

2. Update your contact information

If you move in 2023, you’ll need to update your contact information with the IRS and state tax board. You can do this when you file your return. But it’s better to make the change before Tax Day so you don’t miss important information. To change your address with the IRS, fill out the form you’ll find here.

A name change is more complicated. You will need to notify the Social Security Administration (SSA) of the name change before you file your taxes. If the name on your tax return doesn’t match SSA’s records, it could delay your refund.

How long does it take to get a tax refund? Normally, two to three weeks—if you file electronically and use direct deposit. If you file a paper return or ask for a paper check, expect to wait one to two months.

If your contact information is current, set up an online account at irs.gov. You can use your online account to pay tax balances, set up payment plans, and more.

3. Gather all your tax documents

Gathering all your paperwork just before April 15 can be stressful. Think about starting a file now, labeling it “Taxes 2023,” and keeping handy items that come in during the year. You won’t have most of your paperwork until the months before tax prep starts, but having the file can help you remember to save receipts from donations or a move, freelance invoices, or anything else that you want to remember.

“Organized tax records make preparing a complete and accurate tax return easier,” said Wendy Soto, MBA, partner at Ibarra Carrillo Soto, an accounting and tax advisory firm based in Chula Vista, California. “Simple steps like assembling a binder to compile files and tax paperwork during the year could save you a lot of time and will ensure important information isn’t lost or misplaced.”

As you gather your tax documents, think of all your income: paychecks, interest from savings accounts, dividends from other investment accounts—everything. Your employer and your banks will send you documents that report all this income, either by mail or email.

A few common tax documents you may receive include:

  • Last year’s tax returns
  • W-2s from companies where you worked as an employee
  • 1099s from freelance income
  • Other 1099s from unemployment compensation, dividends, pension, annuity or retirement plan distributions, and interest from any savings accounts and certificates of deposit (CDs)
  • Form 1095-A, which is a Health Insurance Marketplace statement
  • Form 5498-SA to report health savings account (HSA) contributions
  • Form 5498 from your individual retirement account(s) (IRA)
  • Form 1098, for mortgage interest
  • Letter 6419, for any Advance Child Tax Credit (AdvCTC) payments

If you’re self-employed or you have tax-deductible expenses that exceed the standard deduction, you’ll also want to prepare a detailed list of your income and expenses. The standard deduction for the 2022 tax year ranged from $12,950 for single filers to $25,900 for married couples filing jointly. This may change for tax year 2023, so be sure to confirm when you’re prepping your taxes.

To get a head start on adding up your tax-deductible expenses, check your credit card accounts. Many credit card companies provide year-end summaries of your charges listed by category.

4. Max out your IRA and/or HSA contributions

If you have some extra money to invest, consider making extra contributions to your retirement accounts. “Maximizing your IRA and HSA contributions can reduce your taxable income for the year,” said Soto. “A tax expert can draft your tax return and figure out how much more you can contribute and how much you’ll save.”

Making extra payments toward the 2023 tax year will help reduce your 2023 tax bill. It will also get you closer to your retirement goals.

You have until Tax Day to max out your traditional and/or Roth IRAs and your HSA. The maximum contribution amounts are:

  • IRAs: $6,000 ($7,000 if you’re age 50 or older)
  • HSAs: $3,650 for individuals ($4,650 for adults aged 55 or older) and $7,300 for families

5. Consider hiring a tax professional

If your finances are straightforward, you may be able to file your own return. And if your adjusted gross income (AGI) is $73,000 or less, you can take advantage of the IRS Free File program. Free File walks you through tax preparation with guided prompts.

If your AGI is over $73,000 or your financial situation is more complex, you can DIY using tax preparation and filing software.

If you’re self-employed, own rental property, sell a home, or otherwise have a more complicated tax situation, you might consider hiring a licensed tax preparer or certified public accountant (CPA). Both types of tax professionals must meet specific educational and licensing requirements to prepare and file your tax returns.

To find a tax pro, start by asking friends and family for recommendations. You can also search state and national professional associations. Good places to start include the National Association of Tax Professionals and the Accounting and Financial Women’s Alliance.

6. Check your withholding

When you first start a job, your employer usually gives you a form that asks how much tax you want taken out of your paycheck. This is your withholding.

The right withholding depends on your filing status, how many dependents you have, and other factors. If you received a big refund last year, you may be withholding too much. If you owed a lot of taxes, you may not be withholding enough.

Use the IRS Tax Withholding Estimator to determine your withholding. Then, if you need to change yours, contact your HR department so you get the right amount taken out of your paycheck.

Other tips to help tax season go smoothly:

  • Set up direct deposit to get your refund faster.
  • If you need more time to file your taxes, file for an extension. An extension gives you until October 15 to file your return. The deadline to file your extension request is usually Tax Day. If you need help, the IRS website explains how to file for a tax extension. Keep in mind, you will still have to pay any taxes you owe by April 15, 2024. Otherwise, you’ll accrue penalties and interest charges.
  • To get a head start on your 2024 returns, make note of everything you sell through online platforms. You need to report any and all income, from any source, including on items sold via third-party platforms; ask a tax professional for assistance with filling forms for this type of income.
  • Check and bookmark the IRS Tax Alert page to stay informed of other changes that could affect your return.
  • Consider a personal loan if you think you will owe a large amount in taxes and need help paying it.

Take the stress out of taxes

Preparing for tax season involves some paperwork and math, but it doesn’t have to be stressful. If you want to make sure you file your taxes correctly, consider hiring a professional who knows all the ins and outs of tax season.

Are you worried about a big tax bill? Find out how you can use a personal loan to pay your taxes.

Learn About Personal Loans For Taxes

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