As someone who has spent his whole career in finance, you’d think I would look forward to doing my taxes. Nope. I’m just like everyone else. Getting ready to file my tax returns is right up there with colonoscopies and root canals—I can think of 100 other things I’d rather be doing. So, here are a few ideas for making it easier.
Simplify document gathering
Pulling together all of your tax documents can be a big task: property tax bills, mortgage interest statements, charitable donations, 1099s. If you had a lot going on last year, these documents can add up to a big stack. The best way to minimize this mountain is to be gathering these documents all year round.
First you should create a folder, either virtually or in hard copy, to keep all of these documents in one place until it is time to file. Didn’t do it last year? Now’s the time to create that folder for your 2023 returns. Instead of starting with a big search at 11:30 PM on Sunday night, throw those tax-related forms all into one folder every time you get one. I prefer paper copies but you can also create a folder on your computer, too, for electronic copies. Then, you’ll have one place to go to get your critical documents.
What do I need to gather?
Making sure you have all of your documents and information is key, too. If you use a professional tax preparer, they typically send you a tax worksheet / organizer this time of year listing all of the documents and information you need. If you don’t have an organizer, here’s a quick list of top items for individual and joint filers:
· Wage and earnings statements – Form W-2, W-2G, 1099-R, 1099-MISC
· Interest and dividend statements – Form 1099-INT
· Mortgage interest statements – Form 1098
· Qualified Education Programs (529s) – Form 1099-Q
· Charitable donation receipts – If you gave to a qualified charity, e.g., a 501(c)(3) organization, it’s a qualified charity—it can count as a deduction1
· Health insurance exemption certificate
· Health coverage statements – Forms 1095-A, B, & C
· Health savings account statements – Form 8889
· Total paid for daycare provider and daycare provider’s tax i.d. / Social Security number
· Vehicle excise tax bills, automated toll statements such as E-Z Pass
· Miles driven for work, charity or to transport a person for health reasons
· Estimated tax payment receipts – If you pay quarterly estimated taxes, download the federal and state payment receipts
Other things you’ll need
· Copy of prior year tax returns – To help jog your memory and also for comparison; your prior year return can be a big time saver when preparing your latest return
· Bank account and routing numbers - For direct deposit of your refund (Why wait for a check?)
Did you move, change your email address or change employers in 2022?
If you moved or changed emails last year, some of your tax forms may end up at your old address or get returned to sender. Be sure to contact your financial institutions (and old employer if you changed jobs) to update your address and request that they send the forms to your new address. If you set up delivery via secure email, that can save time, but you’ll have to go through the usual security protocols of answering security questions and other hurdles.
Self-employed? Own rental property?
Fortunately, self-employed individuals often can deduct additional expenses. For these individuals, careful recordkeeping of expenses can be particularly helpful. Landlords, too, can often deduct expenses that other filers cannot. We’ll cover these items in an upcoming blog.
If you have questions about how to make tax season easier, give me a call. I’m here to help. You can schedule a quick call with me by clicking HERE.
Lyman H. Jackson
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· 7 tax moves to do now https://planwithfps.com/blog/7-tax-moves-to-do-now
· Year-end tax planning tips for 2022 https://planwithfps.com/blog/year-end-tax-planning-tips-for-2022
· Avoiding a surprise tax bill https://planwithfps.com/blog/avoiding-a-surprise-tax-bill
1 Note: If you take the Standard Deduction, your charitable gifts may be limited. Also, GoFundMe donations have become widespread. Unless the GoFundMe is a qualified charity, you cannot deduct it.
Financial Planning Solutions, LLC (FPS) is a Registered Investment Advisor. FPS provides this blog for informational and educational purposes only. Nothing in this blog should be considered investment, tax, or legal advice. FPS only renders personalized advice to each client after entering into an advisory relationship. Information herein includes opinions and forward-looking statements that may not come to pass. Information is derived from sources believed to be reliable. Information is at a point in time and subject to change without notice. Such information may not be independently verified by FPS. Please see important disclosures link at the bottom of this page.