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Tax Season Prep for Beginners

Tax Season Prep for Beginners

Tax season is here, have you started to prepare? If you are a beginner or someone who struggles with how best to prep for tax season, keep reading for some tips and best practices to help you crush tax season in 2023! 

Collect All Tax Related Documents

One of the most crucial steps to effectively filing your taxes is to have the proper documentation. This includes documents from the previous year and past tax season. Whether you do your own taxes or get help from a professional, it is important that you begin to collect and organize the proper documents. Here are some recommendations from TurboTax:

  • Print out a tax checklist to help you gather all the tax documents you’ll need to complete your tax return.
  • Keep all the information that comes in the mail in January, such as W-2s, 1099s, and mortgage interest statements. Be careful not to throw out any tax-related documents, even if they don’t look very important.
  • Collect receipts and information that you have piled up during the year.
  • Group similar documents together. 
  • Make sure you know the price you paid for any stocks or funds you have sold. If you don’t, call your broker before you start to prepare your tax return.
  • Know the details on income from rental properties. Don’t assume that your tax-free municipal bonds are completely free of taxes. 

Create a Process for Organizing Your Tax Documents 

As you begin to receive and gather your documents, find a folder to carefully organize your information. If you haven’t already, create a process for organizing your documents for the upcoming season, as well as the previous year to ensure you have all the information you will need when it comes to filing. Once you have found an organization method that works for you, carry that method on from year to year. 

Itemizing Your Tax Deductions 

By itemizing your tax deductions, you could potentially save a substantial amount compared to taking the standard deduction. If you own a home, live in a high-tax area, or are self-employed it may be worth taking extra steps to itemize your deductions.  If your qualified expenses add up to more than the 2022 standard deduction ($12,950 for singles and $25,900 for married couples filing jointly) itemizing your deductions is worth it to take the time to do. 

Some items to consider itemizing: 

- Mortgage interest

- Charitable donations

- A portion of medical expense

- Home office 

Plan for How You Will File Your Taxes

If you are filing your taxes and expect a return, filing electronically may be the best and quickest option for you. The IRS processes electronic returns faster than manual paper returns, which means you could expect your return three to six weeks sooner, especially if you have it set to deposit directly into your bank account. 

File Your Return On Time 

Do not wait to begin gathering your documents and making your plan for filing your tax return. If you need assistance, it is important to do your research ahead of time and be proactive so you can file and pay on time. 

If you can’t finish your return on time, make sure you file Form 4868 by April 18, 2023. Form 4868 gives you an extension of the filing deadline until October 16, 2023. On the form, you need to make a reasonable estimate of your tax liability for 2022 and pay any balance due with your request.  Requesting an extension in a timely manner is especially important if you end up owing taxes to the IRS.

The key to tax season is to be organized and proactive in getting ahead of filing and paying your taxes, so you are not late and potentially owe a penalty. A great tool for information is the IRS website