If Punxsutawney Phil is right this year, spring is in the air. Unfortunately, it also means that tax season is just around the corner. With the tax filing deadline quickly approaching, it’s time to start thinking ahead. Although no one likes doing their taxes, there are ways you can make it less miserable. Having a checklist has helped make them more manageable for my family. Here are 5 things on our to-do list before filing taxes every year.
5 Things on the To-Do List Before Filing Taxes
It’s hard to fight the impulse to put off unpleasant things, especially when it comes to tax preparation. However, I have learned over the years that things go much smoother when I prepare in advance for daunting tasks. Therefore, I spend a few hours in the weeks leading up to our appointment to cross these 5 things off our to-do list before filing taxes.
1. Make a checklist.
One way that has helped me stay organized is by creating lists. Whether it’s for work-related or personal tasks that I don’t want to do, creating a checklist breaks the process into bite-sized pieces so it isn’t so overwhelming.
When you apply this method to tax preparation, it ensures that you stick to a timeline rather than procrastinating until the last minute. I’ve learned from experience just how many things can go wrong when you put things off. If you don’t want to spend hours trying to track down documents or contacting employers, financial institutions, or tax professionals during the busiest time of the year, write out what you need to do before you file your taxes.
2. Take inventory of all your tax documents.
The worst part for me is dealing with all the documents, especially since my husband and I both run our own businesses. Between the two of us, there is a lot to keep track of throughout the year.
Starting right after New Year’s Day, I review my checklist and take inventory of all the documents we need to file our return. Since these items must be sent out by January 31, I know to watch for them in the mail. Then, I set them aside in a dedicated spot to keep them organized. Looking at previous returns can cut down on the time it takes to prepare since I already know what I’m looking for. It usually includes W2s and 1099s (1099-K, 1099-INT, and 1099-MISC) and all the receipts for deductible expenses.
If you haven’t received everything you need, you should probably start looking into it. Some of these documents may be available online. Otherwise, you will need to contact your employer, vendor, or financial institution to get them. Remember, you have to get everything in order before you can complete your tax return.
3. Ensure that you have contributed as much as possible to your retirement accounts.
Another important step on our to-do list before taxes is to ensure that we are contributing as much as possible to our retirement accounts. So as I’m reviewing our tax documents, I pay attention to our contributions to the IRAs, 401(k)s, and HSA accounts. Since they offer significant tax benefits and reduce how much we owe the IRS, we don’t want to miss out on any opportunities to increase our return.
Some people don’t realize that you can make contributions after the end of the fiscal year. If you haven’t reached the account threshold, you have until the tax filing deadline to max out your contributions for 2022. However, if you discover that you have contributed too much, you still have time to correct the mistake and avoid paying penalties as well.
4. Send all tax documents to your tax professional.
Since our finances are so complicated, we use a tax professional to make life easier. Our CPA has been working with the family for generations. Since he is much more experienced and knowledgeable of the tax codes, working with him ensures that we can maximize our return with minimal effort.
There is no doubt that he helps us stay on top of things and makes sure that we don’t miss out on any deductions. However, he needs time to prepare the return. Usually, we try to beat the rush and get this done as early as possible. Once we receive what we need, we upload all digitized documents through their secure portal at least two weeks before our appointment. This greatly reduces stress on both sides and makes our office visits much shorter.
5. Decide if you need an extension.
Sometimes, even with a well-laid plan, it may not be possible to file by the deadline. If you have any delays or hiccups in your tax preparation, it can put you in a serious time crunch.
For those who are still waiting on paperwork are have requested amended documents, you may want to consider filing for an extension. Not only will it relieve some stress, but it also gives you more time to gather what you need. Simply fill out and submit the extension form. Once approved, have until October 16 to get your 2022 tax return filed. It’s better to wait and get what you need rather than rush it and make mistakes that you’ll have to correct later.
Important Things to Remember When Filing 2022 Taxes
Although our to-do list for filing taxes has been helpful, it’s also important to pay attention to the news and stay aware of any changes or new deductions that may be available. Here are a few things you should keep in mind for this year:
- The tax deadline is April 18.
- Due to current economic conditions, the tax brackets have changed. You may want to spend some time reviewing them so you know what to expect.
- Although we choose to hire a tax professional, you can easily file yourself to save some money. There are plenty of options for free tax software to choose from.
Preparing my taxes has taught me a lot about financial responsibility and planning. But above all, it has shown me how a good strategy can save you time, money, and unnecessary stress. So ask yourself, are you prepared for this tax season?
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Jenny Smedra is an avid world traveler, ESL teacher, former archaeologist, and freelance writer. Choosing a life abroad had strengthened her commitment to finding ways to bring people together across language and cultural barriers. While most of her time is dedicated to either working with children, she also enjoys good friends, good food, and new adventures.