Can you believe it’s already time to prepare and file taxes? Tax preparation can be a daunting task, but with proper organization and preparation, it can be made much easier. When it comes to tax prep for the year 2023, there are a few key steps to keep in mind. Read on for steps you can take to make this year’s filing easier and less stressful.
First, it's important to gather all the necessary documents. This includes W-2 forms from your employer(s), 1099 forms for any freelance or contract work, as well as any other income-related documents such as investment statements or rental property income. Additionally, gather any receipts or documentation related to deductions you plan to claim, such as medical expenses or charitable donations. Create a special binder, folder, or other document holder to make this easier for you.
It's worth noting that while some documents may be available early in the year, such as W-2 forms which are typically issued by employers by the end of January, others may take longer to become available. For example, investment statements may not be issued until later in the year. It's important to keep track of when these documents should become available and ensure you have them before starting your tax preparation process. You will want to be alert for any tax-related notifications and messages for accounts you have.
To make the tax prep process smoother and more organized, consider creating a system for organizing your documents. This could include using folders or envelopes labeled with different categories such as income, deductions, and receipts. By keeping everything organized in one place throughout the year and being diligent about collecting and filing relevant documents promptly, you'll save yourself time and stress come tax season.
Pace yourself. Many folks wait until the weekend before the tax filing deadline and tackle document gathering and organizing all at once. If you find this stressful, do what I do and pace yourself over the weeks and months before the filing deadline. Once you create your organization system, you can simply add documents to it as they come in. If they are electronic, you may wish to print a hardcopy for your file.
If you use a professional tax preparer, they may have provided you with a checklist or summary of items provided for last year’s filing. Use this checklist as a guide for the current tax year. It can be of great value to look back at what was filed previously and confirm if that same item is being included in the current year’s filing. On that note, do not wait until filing time to find a tax preparer. The best are already taken by that time.
Most importantly, remember to breathe. Tax prep involves gathering all necessary documents including W-2s and 1099s while also keeping track of when other important documents become available. By establishing an organized system for storing these documents throughout the year, you'll make the overall tax preparation process much more efficient and less overwhelming. Taking a breath and pacing yourself can help reduce the stress that builds around this time of year.
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