Eight Steps to Follow Before Filing Your Tax Return

Almost 85 million people hire specialists to complete and file their tax forms, according to the Internal Revenue Service (IRS).1 If this describes you, you should arrange your forms, receipts, and other paperwork well in advance of tax season.

1. Select a Tax Consultant

If you don’t already have one, asking friends and advisors for recommendations—like an attorney you know—can help you locate one. Make sure the individual you select is permitted to prepare federal income tax returns by checking if they have a preparer tax identification number (PTIN).2

Make sure to ask about the costs they charge. Naturally, this is dependent on how complicated your return is. Steer clear of companies who demand a part of your return. The IRS website offers links to the IRS database of preparers, where you may search for preparers based on credentials and area, as well as advice on selecting one.3.

Taxpayers in Florida who were impacted by Hurricane Ian were given extensions for completing their taxes in September of 2022.4 Additionally, taxpayers who were affected by winds and wildfires in several parts of Colorado in January 2022 were granted an extension to file their forms and pay their taxes.5. If a disaster has affected your region, you may find out if you qualify for assistance by looking through IRS disaster relief releases.Six

2. Make a Consultation

Even if you choose to ask for an extension, you should be able to finish your return sooner if you meet with your preparer as soon as possible. You will also receive your refund sooner if you are expecting one.

You risk missing the filing deadline if you put off making an appointment with a tax preparer for too long. That means you might lose out on opportunities to minimize your tax costs, such as making a deductible contribution to an individual retirement account (IRA) or a health savings account (HSA).78

3. Collect Your Records

By the end of January, you should have all the tax documentation you require from your employer or employers, banks, brokerage houses, and other businesses you do business with.9. Verify that the data on each form corresponds to your personal records.

4. Collect All of Your Receipts

Whether you choose to take the standard deduction or itemize your deductions will determine which receipts you must present. You should select the one that results in the largest write-off; however, the only way to be certain is to total your itemized deductions and compare the amount to your standard deduction.

For the 2022 tax year, the standard deduction for single taxpayers is $12,950; for married couples filing jointly, it is $25,900. In 2023, the amounts rise to $13,850 for individuals filing alone and $27,700 for married couples filing jointly.1819

Make sure you search for receipts for property taxes, investment-related expenses, and medical costs that are not paid by insurance or that are covered by any other health plan (such an HSA or flexible spending account). These are all subject to limitations, but it could be worthwhile for you to specify if they’re significant enough.

You will also need to gather any supporting documentation for charitable contributions if you choose to itemize your deductions. For instance, gifts of $250 or more must be accompanied by a written acknowledgement from the charity confirming the amount of the gift and the fact that you were not given anything in return (except from maybe a token item).20 Make a request for such an appreciation from the charity if you don’t already have one. Further information on charity deductions is available in IRS Publication 1771.21.

Your books and records, including those from QuickBooks or any other accounting software, receipts for your company costs, and pertinent bank and credit card statements, must be shared if you have business income and expenses to report on Schedule C.22

5. Provide a List of Your Details

Most likely, you are aware of your Social Security number (SSN), but are you aware of the SSNs of all the dependents you are claiming? Those should be noted (in a secure location, of course), along with any other details your tax preparer might want.

Make a note of the addresses if you own a vacation house or rental property, for instance. If you have recently sold a property, record the dates of purchase and sale, the purchase price, and the proceeds from the sale.

6. Choose Whether to Request an Extension of Time

You can ask for an extension until October 15th to file your tax return if you need additional time to do all of these procedures. To avoid fines and interest, you must still estimate how much tax you owe and pay it by the standard April deadline.

7. Make a Refund Plan in Advance

You can choose how to handle a tax refund if you anticipate receiving one.

The refund may be used in full or in part to pay your taxes the following year. The first quarterly installment may be partially covered if you typically pay anticipated taxes during the course of the year.

The government can deposit the refund straight into your savings or checking account or give you a paper check by mail.

You can use your return to purchase U.S. savings bonds through TreasuryDirect.23 or to make partial or full contributions to specific account types (IRAs, health savings accounts, and education savings accounts).

By filling out Form 8888.23, you can also divide your return among the direct deposit options.

In order for your tax preparer to reflect your wishes on your return, you will need to communicate your wishes to them.

8. Locate the Previous Year’s Return Copy

The preparer you used the year before probably has your prior data if you utilize them again. The previous year’s return might remind the preparer and you of a few things you don’t want to forget if you employ a new preparer. Here are two instances:

Dividends and interest: The banks, mutual funds, and other financial organizations who gave you 1099 forms should be listed on your previous year’s return. Make sure you receive 1099s from them this year by using that list (unless you sold the investments or closed the accounts in the meantime).

Charitable deductions: You can still deduct minor gifts from your taxes if you have a receipt, canceled check, or other evidence of purchase, even if the organization did not acknowledge your contribution. Examine the list of charities you supported last year to determine if you contributed to any of them this year. You can use the list to help you remember to donate to the charity you typically support this year.