Tax tips can help to ease the stress that comes along with tax season. Taxpayers have a lot to keep track of, and the IRS continually updates their requirements each year. Utilize the below tips to reduce your stress this tax season.
Tax Tip 1: Gather Your Tax Records Early
A large part of preparing your taxes consists of having your documents in order before you even begin. Having a good record of the previous year helps to keep you on track and minimizes the chance that you might overlook a deduction or a credit. There are a wide variety of statements and forms that you may need during the tax process, and not all might be applicable to your situation. We’ve compiled a printable list for your use which you can download on our resources page.
To start, you’ll want to gather any income forms, including W2 and wage statements from your employer. Other income forms may include a 1099-MISC or 1099-NEC if you have completed gig work or contractual work. You may also have income forms related to interest (1099-INT), dividends and distributions (1099-DIV), or a Social Security benefit statement (1099-SSA).
If you invest your money in any pension, annuity, retirement account, IRA, or insurance accounts and have made a distribution in the previous tax year, you will likely have a 1099-R sent to you. Schedule K-1s are sent for S-Corps, partnerships, and trusts, while other government payments may receive a 1099-G.
Deduction statements may include a 1098 for mortgage interest or forms for property taxes that you have paid. Be sure to collect any receipts for charitable contributions for the previous tax year.
Other tax documents you may receive include estimated tax payment forms or forms related to education loans or tuition (1098-E or 1098-T).
Tax Tip 2: Use a Tax Professional
Using a tax professional has many benefits. It saves you time from doing tedious tax preparation yourself, and you can rest assured that your taxes are managed by a professional that is up to date on the latest tax law. Making a mistake on your taxes can be detrimental, both in errors or missed opportunities – and a tax professional can help you in both scenarios.
Tax professionals not only help you prepare and file your tax returns, but they can also help you strategize to make sound tax decisions for years to come. At Diversified Tax, our tax team has an entire team of financial planners and investment managers to work with to provide our clients with holistic financial management, should they wish to use it.
An expert in tax preparation can also help save you money. Not only are they saving you time in completing your tax returns, but they can identify deductions and credits that you may miss to help save you additional money.
Tax Tip 3: Take Advantage of Online Tools
The IRS has several online tools that can make your tax life easier, many of which are free for use. If you’re filing your taxes on your own you can file them for free on the IRS website. You can also request copies of your transcripts online.
At Diversified Tax, we use an online portal called Canopy which makes it very easy to access your tax information, send us documents, complete signatures and communicate with your tax team all in one centralized location. Canopy also has an easy-to-use app for both Apple and Android.
Tax Tip 4: Double Check Everything
The key to successful tax filing is reducing your errors, so double-check everything. Review your return to ensure it is complete and accurate. Check the spelling of your name, your spouse’s name, and any children’s names on your return. If you are using a tax preparer, please ensure that the information you have provided to the tax professional is complete and accurate. It is always a smart idea to check your entries against your previous year’s entries to ensure that you haven’t mistyped something if you’re entering the data yourself.
We hope these tax tips help ease the burden of tax preparation in 2022. We’re always here to help you prepare your taxes, and you can schedule a meeting with us using our contact page.
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