When tax time starts approaching, it can be stressful. Nobody enjoys filing their tax returns, even with the potential of receiving a refund when it’s all said and done.
Uncertainty is a common source of unease, and questions abound. Is my tax return completed correctly? Will I get a refund, or will I owe? How much will I get back or owe?
While you may never enjoy tax season, there are things you can do to make it less stressful. Below, we share our individual tax preparation tips to help you get organized and get through tax time more easily.
Gather Your Tax Documents
By the end of January, you should have most if not all of the tax documents necessary to file your tax return. They’ll come from employers, banks, brokerage firms and similar institutions with which you do business. Keep them together and organized in a folder or large envelope.
The kinds of tax forms you may receive include:
- W-2 – job earnings
- 1099-DIV – dividends
- 1099-INT – interest
- 1099-B – securities
- 1098 – mortgage interest payments
- W-2G – gambling winnings
Not sure if you’ve received all the tax documents you should have? One good way to know is to reference last year’s tax return and see if anything is missing. You could also use your tax return to create a checklist of tax forms that you can utilize every year.
You will also want to document relevant personal information for yourself, your spouse and claimed dependents so it’s readily available when it’s needed. This information may include:
- Social security numbers
- Address(es) of owned vacation homes or rental properties
- Sold property information
- Dates bought and sold
- Amount originally paid
- Amount received from the sale
Decide What to Do About Deductions
You have the option to claim the standard deduction or itemize your deductions. In the 2022 tax year, the standard deduction for single taxpayers is $12,950 and $25,900 for married couples filing jointly. To see if itemizing deductions will produce a bigger write-off, add up your itemized deductions from these receipts:
- Medical costs not covered by insurance or reimbursed by another health plan
- Property taxes
- Investment-related expenses
- Charitable contributions
Determine How to Manage Your Tax Preparation
How are you going to file your taxes? Will you do it yourself using e-filing software or hire a tax professional?
Self-filing with software may seem easier, more convenient and cheaper. However, many people find that it’s more confusing than anticipated and comes with unexpected costs and fees.
Local accountants have the expertise to manage the work for you, bring clarity to the items you’re unsure about and maximize your tax refund (or minimize the taxes you owe), which makes this option a good investment.
The last of our tax preparation tips is to plan ahead and start early. Doing so enables you to:
- Track down any missing documents
- Get answers to any questions you have
- Reduce the additional stress of coming down to “crunch time”
- Ensure you can get an appointment with a tax preparer/accountant
- Get your refund sooner
- Save money to pay any taxes owed
At Kilday, Baxter & Associates, we offer individual tax preparation and individual tax planning services. We are available year-round to help you and answer your questions. Contact us to speak with one of our experts or schedule an appointment.