Are You Ready for Tax Season? 5 Tips to Ensure You Are Prepared
As hard as it is to believe (and as much as we hate to admit it) — the countdown to filing your taxes has officially begun. Are you ready?
Unfortunately, filing your taxes can sometimes feel like managing a veritable mountain of paperwork. Starting the process now can help you avoid mistakes and optimize every deductible you qualify for before the April deadline. Some important considerations include the following:
1 – Create a Folder for the Paperwork
Gather all hard copies of your documents and put them in a folder. Make a pdf of all electronic documents and prepare them to be sent to your tax preparer. Once all documents are collected, look them over and reach out to financial institutions, etc., if you believe you are missing anything.
2 – Find Your 1099s
Do you use Venmo, PayPal, cryptocurrency trading platforms, or any other online sales platforms? If yes, please look for a 1099 from each of the platforms you use. The IRS requires that 1099s be issued by all exchanges no later than the tax year 2023. If you have had substantial transactions, you may be required to report them on your 2022 tax return.
3 – Outline Green Activities
During the year, did you:
- Purchase an electric or hybrid vehicle?
- Make any energy-efficient home improvements?
- Use clean energy (solar, battery, wind, geothermal) to power your home?
If you answered “yes” to any of the above, you might be eligible for a tax credit. Please gather all information related to any of the above activities and be prepared to discuss it with your tax preparer.
4 – Max Out Your IRA
If you have an IRA, be sure to max out your contributions before the filing deadline in April 2023. The limits are $6,000 for people under 50 and $7,000 for people ages 50 and older. Contributions to a traditional IRA may be tax deductible, and it is important to make all contributions before the filing deadline.
5 – Talk to Your Tax Preparer?
Did you have a significant change in income from the previous year? If your income increased for any reason, discuss this with your tax preparer and consider making a payment to the IRS ahead of the filing deadline to avoid certain penalties and space out payments.
If you have questions, Leone, McDonnell & Roberts can help! Contact us today to schedule a consultation with one of our tax professionals.