IRS has officially announced that the 2023 tax filing season starts on January 29th, 2024. It's time to start preparing your documents to file your tax return. If you have earned income in 2023, you are required to file a federal tax return and a state return depending on where you live. The tax filing deadline for this year is April 15th, 2024, start gathering your documents now to ensure you file on time.
Here are six tips to help you prepare for tax season:
1. Gather your documents
Organize all your necessary documents, you'll need to file your tax return. Here are some common items needed to file your tax return:
Social Security Information
Identity Protection PIN (IP PIN) - if you have been issued an IP PIN, you need it to complete your return
Last year's tax return
Bank account information - if you want to receive your refund via direct deposit
W-2 from your employer(s)
Form 1099-K, 1099-NEC, 1099 MISC, or other income statement if you worked in the gig economy
1099-INT, 1099-B, 1099-DIV, & 1099-R
Any income documents related to digital assets like cryptocurrency or NFTs
Business income and expenses, If you're self-employed or own a small business, make sure you keep receipts to track your expenses.
Form 1095-A - health insurance marketplace statement
2. Make Sure Your Personal Information is Updated
If you recently moved, you want to make sure your address is updated so you don't miss important documents or communication from the IRS.
If you had a name change, you need to contact the Social Security Administration and apply for a new Social Security card with the new name. This will help avoid any delays when it is time to process your tax return.
3. Understanding Your Filing Status
Your filing status is used to determine your filing requirements, standard deduction, eligibility for certain tax credits, and your income tax bracket.
There are five main filing statuses that all taxpayers fall under which are Single, Head of Household, Married Filing Jointly, Married Filing separately, and Qualifying Surviving Spouse.
4. File an Extension
If you are unable to gather all of your tax documents by April 18th, you can file an extension to get more time to file your tax return.
When you file an extension you will have until October 16th. To file an extension, you'll need to complete IRS Form 4868 Extension to File or your tax preparer can do this for you. Filing an extension will allow you to collect all necessary documents, ensure your tax return is filed accurately, and avoid penalties for failing to file on time.
Keep in mind, the extension is only for filing your tax return. If you expect to owe taxes, it will be best to pay the tax owed by April 18th to avoid penalties and interest.
5. Create an IRS Online Account
Creating an IRS Online Account is a great way for you to stay on top of your tax information without contacting the IRS via phone.
The online account allows you to review your tax records, access tax transcripts and forms for current and previous years, view payments, make tax payments, and set up payment arrangements. You can set up your communication preference with the IRS, which allows you to receive notices via online or by mail. Also, you can authorize a tax professional to work on your behalf through your online account.
If you don't have an IRS Online Account, set up your account now.
6. Decide on How You Will File
There are multiple options when it comes to filing your tax return.
There is IRS Free File which allows qualified taxpayer that makes $79,000 or less to file their taxes using a guided tax preparation software. It's easy and at no cost to you as long as you meet the requirements.
If your tax situation is straightforward, it may be easier to file on your own. If your tax situation is complicated, it may be better for you to have an experienced tax professional to handle your tax return.
Need help with filing your tax return? We can assist you with all of your tax preparation needs. Schedule a 15-minute consultation to get started now.
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