Even though the date of filing tax returns is known in advance, for many, the tax period comes as a surprise. And all because taxpayers do not know how to get ready for it right. Filling in the required paperwork can be overwhelming. If you want to prepare for tax season in advance, here are all the recommendations and pro tips.
Organize Your Tax Paperwork
The list of required documents may vary depending on your business and personal circumstances. That is why tax experts recommend that you start preparing for taxes in advance and find out what may be required of you so that you do not have to face penalties. You may need to complete Form W-2 or Form 1099-NEC (or -INT) and file adjustments to income.
When you find out exactly what forms and documents are required, you can start filling them out. According to IRS statistics, each taxpayer spends an average of about 12 hours preparing and filling out the necessary paperwork. You can save your precious time by using online tools like PDFLiner. In the library of this editor, you can find any forms needed for tax reports that you can fill out and send to recipients directly on the site.
Decide How You’ll File Your Taxes
One of the useful tax season tips is the recommendation to decide in advance on the method of submitting your documents to the tax office. You have several options; study them all to choose the best option.
Submit papers on your own. This option is suitable for those taxpayers who are officially employed. If you do not have any complicated life situations, the set of necessary documents will be standard. To quickly fill them out, you can use the PDFLiner, where you will find all the required fillable IRS forms and recommendations for their use.
Contact tax preparers or accountants. This option should be chosen if you are self-employed or have your own business, as the required documents may vary. If you have experienced significant life changes during the tax year (such as a divorce or real estate purchase), seeking professional help is also better.
Learn Which Credits and Deductions You Can Take
Your preparation for the tax filing season should be to determine if you qualify for any deductions or credits.
In total, the IRS identifies five types of credits and five types of deductions; they, in turn, are also divided into subtypes. The former reduces the amount of tax; the latter lowers the taxable amount of your income. The first group includes the following types: child tax, dependent, retirement saving, health coverage, tax, lifetime learning, and many other credits. The second group includes business expenses, real estate tax, student loans, HSA, dental expenses, IRAs, capital loss, and other deductions.
Keep in mind that you need to meet specific IRS requirements to receive these “reductions.” If you are unsure whether you qualify for any credits or deductions, your best bet is to seek the advice of a tax expert.
Make Sure Your Name & Address Are Updated
In preparation for the tax season, check that your name and address are up to date. If you have changed your name, e.g., due to marriage or divorce, and your permanent residence address, you need to provide paperwork confirming it with the Social Security office and the IRS. If you file tax forms with details of spouses, children, and dependents, their names should also be up to date.
Remember About Tax Deadlines
Meeting deadlines is an essential part of the process of preparing for tax filing. For the current year, individuals are required to report by April 18th, 2023. Deadlines for annual business income reports vary depending on the form of business entity and can be either mid-March or mid-April. You may be penalized if you do not submit the required documents to the tax office on time. If you feel you are not on time, formally request an extension that will give you a few more months to prepare the required paperwork.
The Bottom Line
Filling out tax forms and collecting the required documents might seem like a chore. However, if everything is done gradually, step by step, you can avoid headaches and haste. This short guide on how to prepare for tax season covers all the key points so that you do everything right and do not make mistakes.
