SHARE ON
Springtime: when the sun starts shining, flowers are blooming, and taxes are due. Tax season can be scary, especially if you’re unprepared. There’s nothing worse than rushing through your taxes in April.
Last minute filings are never ideal, so it’s time to prepare yourself now. Get ahead on the most stressful time of the year with these basic steps for your filing.
Decide How you’re Filing
The first step to filing is to decide how you’re going to get the job done. You can either file by yourself or go to a professional tax-filing service.
Filing your own taxes can benefit you in several ways. By filing on your own you can save money, gain some insight in your own finances, and have some peace of mind knowing that your filing was in your own hands.
On the other hand, filing your won taxes can leave some room for error, especially if you’re a first-time filer or have never handled your own paperwork before. The more assets, withholdings, and dependents you have the more complicated your filing process can become.
DIY tax filing will take more time, so if you’re set on doing it yourself carve out the time to do so now. Procrastinating your taxes is never a good idea, but if you procrastinate when you’re filing solo is major self-sabotage.
If you aren’t up to filing on your own, go to a professional or pay for a guided service like Turbo Tax. Turbo Tax’s services aren’t free, but you will pay a relatively low service fee. For a hand’s off approach, consider a full-service company like H&R Block or a local tax preparer.
Full-service tax preparers can charge $100-$200 per hour depending on their level of expertise and location. So budget for a moderately hefty bill if you opt for a full service tax filing service.
Know your Filing Status
Your tax filing status will change the requirements of your filing. Know how your filing, then make note on any additional forms you must complete for your status. The five tax filing statuses are as follows.
- Single
- Head of household
- Married filing jointly
- Married filing separately
- Qualifying widow/ widower with dependent child
Guarantee That your Name and Address are Updated
This may seem simple, but it’s essential. If you have relocated or changed your name, the IRS has got to know before you file. It is important that your information matches your tax forms.
You can update any changes by contacting your local IRS office. For a name change you will need to file a Form SS-5 and notify IRS ASAP. For an address change you can complete Form 8822 or provide your new address when you file your return.
Organize your Tax Documents
Gather everything you’ll need to file. This might take a little bit of effort and communication, but it is the hardest part of this process. Here are some of the most common documents you’ll need.
- A copy of last year’s tax return
- W-2 forms
These forms detail the taxes you’ve paid and income you’ve earned through your employment. You’ll need a W-2 form from every job you’ve worked during the year you are filing for.
- 1099 forms
These forms are for those who are self-employed or independent con tractors. All of your clients will submit a 1099 detailing how much you were paid for all your projects.
- Form 1089
This is for homeowners who have to detail the information of their mortgage in their tax filing.
- Form 5498
This form details the contributions you made to your individual retirement account (IRA) throughout the year. The amount you contributed may be tax deductible as long as you meet the requirements set by the IRS.
- Letter 6419
This form details your report for the Advanced Child Tax Credit (CTC) payments.
Contribute to your IRA Before April
If you’ve been meaning to contribute to your IRA account, do it before the filing deadline in April. You can contribute to your savings until April 15, 2023.
File an Extension if Necessary
If you’ve waited too long and you have a feeling you won’t be able to make the deadline it may be wise to file an extension. File Form 4868, and then your return will be due June 15, 2023.
This isn’t an excuse to procrastinate further. If you file an extension, get on top of your taxes as soon as possible.
File your W-4 as Soon as Possible
If you receive a W-2 from your employer every year, you’ll have to complete this form at the beginning of the year. Every January, your employer will request that you file a W-4 form. This is where you can adjust your withholdings and deductions from your paycheck.
If you’re unsure of how much to withhold or deduct, the IRS has a tool to help you optimize your paycheck and tax return. Try the IRS Tax Withholding Estimator to help you with your W-4. Just note that the results from this questionnaire are estimations, so leave some room for error in your financial calculations.
In Conclusion
Tax season is never fun. The secret to making it easier is getting ahead of the game. When it comes to filing your taxes, preparation is key. Stat early, and use these essential steps as a road map to getting your taxes filed.