It may not be the time to worry about the financial stress of the 2022 holiday season because the 2023 tax season officially began on January 23. On the first day, the IRS began accepting and processing 2022 tax year returns.
If you are thinking of holding off your tax filing until April, you may want to rethink your plans. Getting started as soon as possible can help you make sure that you aren’t disorganized with your relevant tax documents at the last minute. It will also help in ensuring that you receive your tax refund sooner rather than later.
Whether you’re a first-time taxpayer, or have already gone through the tax season drill, there are a few steps every filer should follow to ensure that the process goes on smoothly. Here are three moves that can help you in preparing better before you start filing your tax return:
Enlist tax prep help as soon as possible
One of the first things to consider before beginning your tax management: Will you file your own taxes this year or consult an expert to file a return on your behalf?
According to experts, if you are seeking to consult a professional tax preparer, January is an appropriate time. If you wait until later in the tax season, professional tax preparers most likely will not take on new clients. If you are planning to use tax software, it is advised to compare your choices, including IRS Free File.
Ensure key measures to reduce your 2022 tax bill
If you think ahead and plan your financial strategies, you may get several benefits like deductions in your tax bill. You can get a 2022 deduction by making a health savings account contribution before the tax deadline. Keep in mind to enroll in an eligible plan. You can also get certain tax relief pre tax IRA contributions, depending on your income and participation in a workplace retirement plan.
Keep a tax forms checklist and an up-to-date calendar
It is high time that you organize your finances and tax forms required for your 2022 return. Make sure to review last year’s records and create a checklist of the forms needed this year. Some common forms include a W-2 from your job, 1099-NEC forms for contract work and 1099-G for unemployment income.
Other forms to keep in mind are 1099-B for capital gains and losses and 1099-DIV for dividends and distributions (with a brokerage account). To state your deductions, you may require to fill 5498 for individual retirement account deposits, 5498-SA for health savings account contributions and 1098 for mortgage interest.
In addition, important dates for the 2023 tax season include April 18 – the national due date to file a 2022 tax return or request an extension. October 16 is the due date to file for those requesting an extension.
How to use your tax refund
The IRS typically issues most refunds less than 21 days after you submit/process your return. Therefore, it is advised to take this time to plan how you’ll use your refund. Avoid frivolous expenditures and plan carefully on how to make the most of the return you will receive. You can clear your credit card debt or boost your emergency fund. Or just save it for a bigger financial investment like purchasing a home. Choose wisely!
While the thought of filing your taxes may be intimidating, if you start early and get organized, you can do it with ease.
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