Tax time is when you get back the money you overpaid to Uncle Sam, or it's a time to pay Uncle Sam for underpaying your taxes during the previous year. Preparing to file your taxes before sitting at your computer or with a tax preparer can help you identify all tax credits you may be eligible for. It can also ensure that you have every document you need to eliminate the need to file an amended or late tax return. To help you prepare, I've compiled a roundup of responses, from relying on a handy checklist to keeping an eye out for scams to see how you can effectively prepare to file your taxes in 2023.
Preparation Tips for Filing Your Taxes in 2023
Keep a Log / Checklist
Every year I create a log or checklist so I miss nothing I need to give to the accountant. It's a simple Word document I update throughout the year if I open an account or do anything tax-related.
At tax time, I open this document and print all the tax documents for the accountant. Having this simple checklist helps me not to miss any document that the accountant might need and also helps to ensure that I don't miss any deductions that I might be eligible for.
For example, you might have put money into an HSA the first week of the year, and by the end of the year, you're not sure what year you put it in for. Having this simple document saves me from having to log in to a bunch of different accounts to research getting my tax documents ready.
Evan McCarthy, President & CEO, SportingSmiles
Review the Deductions You Can Qualify for
Review the deductions you can qualify for, like student loan interest or medical expenses, so you're ready when it's time to file. Doing this will help ensure you get the most out of your taxes.
Last, make sure you have all the documents ready to go when it's time to file. This includes tax forms from employers, investment accounts, and anything related to deductions. These documents will allow you to efficiently complete your return and avoid any last-minute scrambling for information.
Michael Fischer, Founder, Elite HRT
Ensure you have all the tax forms and keep organized records of pertinent expenses and deductions. Start early and create a folder for any documents that may come in the mail. Work with your financial advisor and CPA to prepare for tax season well in advance; having a solid plan can help to reduce stress and help you feel organized.
Alison Stine, Founder, Stine Wealth Management
Start Preparing Your Documents Early
If you're itemizing deductions, start that process early. There's nothing worse than realizing your appointment is the next day—or that it's April 14—and you haven't started sorting out your expenses yet. You'll likely need more time than you think to compile all your receipts, count everything, and get those numbers in order. Don't wait till the last minute. If you start early, you have more time to sort out any issues that arise as you prepare.
Rachel Roff, Founder & CEO, Urban Skin Rx
Stay Up to Date on New Tax Laws
Keeping up with changing tax laws will be a crucial part of tax preparation for 2023, as new laws can affect your obligations and deductions. To make sure you have the most accurate information, it's advisable to research any changes to tax law both before filing returns this year and in the future.
Furthermore, business owners should take extra care to stay informed on any new regulations related to deductions or credits involving their particular industry. Doing so can help them maximize savings when filing taxes and may even uncover valuable opportunities to reduce the impact of taxation on their bottom line.
Michael Sena, Founder & CEO, SENACEA
Record Important Data Throughout the Year
It's never too early to prepare to file your taxes throughout the year. Here's one tip to help you get a jump start: Make sure you keep careful records of all your income sources and expenses throughout the year. You should also keep track of any deductions or credits you qualify for, such as charitable donations or home office expenses. Make sure you stay on top of any changes in tax laws or regulations that might affect you to have all the documents needed to file your taxes correctly.
There are also many tax software options available, so take some time researching each and deciding which is the best fit for you. This will make filing your taxes much easier when the time comes.
Tristan Harris, Demand Generation Sr. Marketing Manager, Thrive Agency
Find a Qualified Accountant or Tax Professional
With April 2023 rapidly approaching, now is the time to get organized for tax season. If you want to ensure that you correctly file your taxes and on time, the best way to ensure that you meet all of your obligations is by finding a qualified accountant or tax professional.
Doing some research ahead of time and interviewing a few firms can save you a significant amount of time and energy in the long run. Taking this step will ensure that you have an experienced set of eyes on your return and that any errors are caught before they ever reach the IRS.
Jim Campbell, Owner, Camp Media
Weigh Your Options
When deciding how to file your taxes, it's important to consider the complexity of your tax situation and your own confidence and experience with tax preparation.
One option to consider is using tax software, which can be a cost-effective choice for those with simple tax situations, such as only filing a W-2 with a few deductions. However, if your tax situation is more complex, such as if you're a contract worker filing a 1099, it may be beneficial to work with a tax professional.
A tax preparer can guide you through the process, provide suggestions, and take the guesswork out of filing your taxes. A tax preparer can make the process efficient and stress-free if you lack the time or confidence to do your taxes.
Ultimately, the choice between using tax software or working with a tax preparer will depend on your financial situation and needs.
David Ring, Sr. Marketing Manager, MCT - Trading
Don't Forget Any of the Business Expenses
If you have a business, you can deduct many of the expenses related to that business. This can reduce your taxable income and possibly even eliminate taxes altogether. If you want to reduce your tax bill as much as possible, include all business expenses in your tax return.
This includes office supplies, travel expenses, and equipment rental fees. If you forget to include these expenses, you could end up overpaying the IRS. Keep in mind that some expenses cannot be included in the tax return. For example, if you're a business owner, you can't write off the cost of your vacation. Write-offs are only for expenses directly related to your business.
Luciano Colos, Founder & CEO, PitchGrade
File Early, but Not Too Early
Don't file too early. In general, it's better to get your taxes sent in sooner. But you want to ensure you've received all the documents you need for filing before you start. If you complete your taxes before receiving a key document, you'll need to file an amendment, which can impact what you owe or will receive back.
These amendments also cost money to file. By all means, try to get your taxes done well before the deadline. Just don't do them before you have received all the paperwork you need.
Brian Munce, Managing Director, Gestalt Brand Lab
Report All Gig Income
Counting gig work income as you prepare to file your taxes in 2023 is crucial. Always ensure that you accurately report all of your income to the IRS and pay the correct amount of taxes.
Failure to report all of your income, including gig work, can cause fines and penalties and may even lead to an audit. Reporting side sources of income is crucial in 2023, as we live in an era of the gig economy. Who doesn't have a side hustle these days?
Surprisingly, many people still treat those as non-jobs and fail to report them to the IRS. This mindset can lead to severe repercussions, so this year, ensure you treat all your sources of income equally, tax-wise.
Additionally, counting gig work income is important because it affects your eligibility for certain tax credits and deductions. For example, if you are self-employed, you may be eligible for deductions for business expenses, such as office supplies, travel, and equipment. Don't pay more than you have to!
Piotrek Sosnowski, Chief People & Culture Officer, HiJunior
Be Aware of Scams
Noticing and shielding oneself from tax scams is one of the best practices. With tax season comes several scammers impersonating the IRS to get hold of personal financial information. It happens every year without fail because of the IRS's inherent notoriety. Verify any emails, texts, and calls from people claiming to be the IRS; the real institution truly only contacts people via mail unless things involve active litigation.
Annu Daniel, CEO, Elohim Company