Income earners must file federal tax returns and, in most cases, state tax returns for 2023. If you are new to filing your taxes and do not know where to start, we have outlined the steps you can take to prepare like a pro.
Know your filing status
Your filing status deciphers who pays what, outlines your tax obligations, and qualifies you for credits and deductions. Deductions vary based on your filing status, i.e., married couples who file separately are allowed a $13,850 deduction, compared to married couples filing jointly, who are allowed a standard deduction of $27,700.
Your filing status also determines your tax rates. Gathering this information accurately is best done with software like Intuit Accountants software, so you can export everything automatically and file your return. There are five statuses that taxpayers can fall under: single, head of household, married joint-filing, married separate filing, and qualifying widow or widow with dependent child.
If you are not clear on your filing status, use the IRS tool to determine the best option for you. You’ll answer some questions and be prompted to the filing status results that align with your specifics.
Request an extension
If you are waiting on tax documents and are not sure of their arrival dates, file for an extension so you have a buffer period. Request an extension by filling out the Form 4868 or have your tax preparer do this. It does not cost anything to request an extension; however, if you owe taxes, interest will be added, and you may be subject to penalties.
Compile your tax documents
Next, compile your tax documents so that everything you need is in one place for easy filing. The key forms to include in your paperwork are:
- A copy of your tax return from last year
- W-2 forms
- Form 1098
- 1099 forms
- Form 1099-DIV
- Form 1098-E
Note: You may not need every form mentioned above. For example, Form 1098-E is a student loan interest statement that may not apply to your situation.
Additional forms you may also need to include are Form 5498, Form 1095-A, and Letter 6419. You will need to compile receipts and statements that track your business expenses. The forms mentioned here are the primary documents you’ll need, but there are other forms you may also need to include to maximize your tax deductions.
Decide whether you’ll work with a professional or do it yourself
Depending on your situation, it may be more feasible to work with a tax professional to help you get organized and file for the 2023 year.
Based on the complexity of your tax situation, it may be a wiser choice to hire a tax professional to file for you.
If your situation is more straightforward, it may be more feasible to rely on tax filing software rather than hiring a local CPA to complete the process.
Complete these Additional Steps to Prepare for Tax Season
- Max out your retirement contributions so your taxable income is lowered; you can continue contributing until the deadline.
- Use the IRS estimator to ensure you are withholding the correct amount from your pay.
- Before you begin organizing for tax season, double-check that your name and address are listed accurately by the IRS and the SSA.
Get Ahead of the Game and Prepare like a Pro
Get ahead of the game and prepare for tax season like a pro. Set aside some time to organize and gather the paperwork you need to file correctly. Consider requesting an extension, hiring a tax preparer, or utilizing tax software to make the process easier.
