Tax time will be here before you know it and you don’t want to be caught unaware. Employers typically begin sending W-2s in January, so right now is a great time to start thinking about your taxes.
This article will show you some ways to get set for the upcoming tax season.
4 Easy Ways To Prep for the Tax Season
We’ll expand on some tips from the Internal Revenue Service (IRS) as well as get some pointers from money expert Clark Howard.
1. Adjust Your Expectations Around Projected Tax Refund Dates
The IRS says you may not get your tax refund when you expect it.
“Although the IRS issues most refunds in less than 21 days, the IRS cautions taxpayers not to rely on receiving a 2023 federal tax refund by a certain date, especially when making major purchases or paying bills,” the agency says. “Some returns may require additional review and may take longer to process if IRS systems detect a possible error, the return is missing information or there is suspected identity theft or fraud.”
Regardless, while you may be expecting a return or find yourself disappointed if you don’t get one, Clark says it’s better if you don’t, and here’s why:
“I’d prefer that you get no refund at all. If you are getting one, it means that you’ve made an interest-free loan to the government and your money has been working for them — not you — all year long.”
2. Gather Your Records
Don’t wait until tax season to start gathering your tax documentation. Instead, take the time to make sure your mailing address is correct with your job, bank and other financial institutions so you receive all of your tax documents on time. Once you get your year-end tax documents, carefully review them for accuracy. If you spot any errors, promptly contact the relevant parties to notify them to make any corrections.
No matter if you use an electronic or a paper record-keeping system, make sure you’re keeping at least the last three years of your tax returns and supporting documents, which is what the IRS advises.
Clark says he keeps his tax returns twice as long just in case any problems arise.
“The IRS has three years to go after you on your tax return and requires backup proof of everything you’ve claimed,” he adds. “They’ve got six years to go after you and say, ‘Hey you’ve underreported this terribly.’”
3. Get a Jump on Your Tax Withholding Status
If you think you may need to adjust your tax withholding status, the ideal time to do so is early in the year.
The IRS has a Tax Withholding Estimator that makes it easy to see the tax implications of any adjustments you choose to make.
“You can also consider additional tax payments, or submit a new W-4 form to your employer to avoid an unexpected tax bill when they file,” says the IRS.
4. Decide How You’re Going To File
Should you hire an accountant or do your taxes yourself? Luckily, there’s no wrong answer. It’s ultimately up to you.
Free File
Do you feel comfortable filing your taxes yourself? You may be able to file electronically for free with IRS Free File. The IRS Free File program features brand-name tax preparation software packages that may be able to find deductions, credits and exemptions.
The IRS says that some Free File packages offer free state tax return preparation.
There are also several free and cheap tax preparation software options if you don’t qualify for IRS Free File.
Hire a Tax Preparer
If you want to hire someone to do your taxes, you may be able to find a tax professional on IRS.gov’s Choosing a Tax Professional page. You can also read about tax preparers in your area in the agency’s Directory of Federal Tax Return Preparers with Credentials and Select Qualifications.
Final Thoughts
While it would be a stretch to say that getting a jump on your taxes will be fun, adequate preparation can reduce the hassle and more importantly, the stress.
The IRS says direct deposit is the fastest way to get your tax refund if you file electronically. “Direct deposit gives individuals access to their refund faster than a paper check,” the agency says.
The Interactive Tax Assistant on IRS.gov is a good resource if you have general tax questions. You can also call Team Clark’s free Consumer Action Center at 636-492-5275.
