Tag Archives: Preparing for taxes

Guide to Preparing for Tax Season 2023

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Tax season can be daunting, but don’t let it overwhelm you! Last year, we shared tips on what to do with your tax return, and this time we’re focusing on tax season preparation. With some planning and organization, you can make sure that you’re ready when the time comes. Here are a few tips and tricks to help you get equipped for tax season 2023.

Gather your documents

The first step in getting ready for tax season is gathering all of your documents. This includes any income statements, like W-2s or 1099s, as well as any deductions or credits you may be eligible for. Make sure to keep all of these documents in one place so that they are easy to access when needed. Additionally, if you made any donations throughout the year, make sure to save receipts from those as well.

Understand tax changes

It’s important to stay up-to-date on any new tax changes that have been implemented since last year. While most of the standard deductions remain the same, there may be some new credits or incentives available that could lower your overall tax amount. New Jersey has incentives for working individuals and families that could help put more money back in your pocket. The IRS also lists any changes that could affect your tax refund in 2023.

Organize your finances

Once you’ve gathered all of your documents and familiarized yourself with the latest tax changes, it’s time to get organized. Knowing how much money you made throughout the year will help determine what forms need to be filed and how much you need to pay. Take some time now to organize all of your financial information so that filing taxes will be a breeze come Tax Day, which is Tuesday, April 18th this year.

Determine how to file

There are two main ways to file your taxes and what you choose will depend on your income level and comfort with the filing process. If you own property or run a business, it’s likely best to work with a professional. Whereas single individuals with one source of income may find it easier to use tax software.

First Financial members get access to tax season discounts through Love My Credit Union Rewards. Members can save up to $15 on TurboTax federal products, and $25 for new clients on tax services through H&R Block (returning clients will receive Tax Identity Shield for free, a $35 value).*

Tax season doesn’t have to be scary! With a little preparation and organization now, you can make sure that everything runs smoothly come April 18th. If you’ve already filed for this year, follow these steps now so that come tax time next year – you’ll already have everything taken care of in advance. Have more questions? Stop in your local branch to speak with a representative today!

*Limited time offer. Terms, conditions, features, availability, pricing, fees, service and support options subject to change without notice. Intuit TurboTax®and H&R Block are tax preparation software products offered to our members through Love My Credit Union Rewards and are not products of this credit union.

3 Reasons to File Your Taxes Sooner Rather Than Later

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The Federal tax deadline has been extended to May 17, 2021. If you are planning on waiting until a lot closer to that day to get your taxes done, here are three reasons you should really get moving and file your taxes as soon as possible.

Sooner is better regardless of the outcome: The sooner you file, the sooner you’ll get money back if you are getting a refund. If 2020 hit you hard financially, that refund may be something you’ve been banking on. And if you get the opposite result and owe the government money, you’ll have more time to save up and pay. You can’t go wrong filing as early as possible.

You’ll reduce your stress: Filing tax paperwork was probably simple when you were in your 20s. Once life gets more complicated, it’s not quite as easy or quick to file. If you know your taxes will be more difficult than in past years, lessen the stress it might cause by getting started as soon as you have your W-2. Filing early can prevent Tax Day from being a source of stress.

It’ll be a smoother process: Not only is the IRS less busy at the beginning of the year, but tax professionals typically are as well. Keep this important detail in mind if you’re not filing on your own. If you file online it won’t be a big deal, but if you need a tax professional to help sort you out, you’ll be glad you got started earlier. The closer you get to the tax deadline, the longer the whole process will take (as well as you probably won’t be the only last minute client).

The moral of the story: Start preparing your tax documents and file as soon as possible!

Article Source: CUInsight.com

How to Prepare for Tax Season

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We’re in the midst of prime tax season. Have you filed your taxes yet? If not, or if you are unsure of how to be best prepared – keep reading! Being organized can help you reach your financial goals as well as make the filing process easier for both you and your tax professional.

What items should you bring with you when you have your taxes done?

  • A valid photo ID
  • A social security card or verification letter, or individual TIN (Taxpayer Identification Number) for all family members.
  • W-2 forms for all jobs worked the previous year
  • Form 1099-G for unemployment compensation, if applicable
  • Any childcare provider information from the previous year paid (name, address, tax ID number, and total paid).
  • A copy of last year’s state and federal tax returns
  • Any banking/mortgage interest statements, federal loan documents, retirement statements, and organizations you made charitable donations to with the amount donated.
  • Form 1095-A, B, or C and any affordable health care statements or health insurance exemption certificates.
  • Bank account information and a voided check (for receiving your return via direct deposit).

If you are married and filing jointly with your spouse, you will want to make sure you and your spouse are both present at the appointment so you can each sign your joint return. Depending upon your individual financial situation, there may be other documents you will need to bring with you. If you have questions about other items you think you may need to bring to your annual tax appointment, contact your tax preparer in advance.

How do you make the most of your tax return?

  • If you are getting a return back, it’s a good idea to have it deposited to your bank account with direct deposit. There is no cost to do so, it arrives faster than a check, and will be right there in your bank account for when you need it.
  • It’s always a good idea to save for the future – every little bit helps!
  • Do you have outstanding revolving credit card debt? Pay it down with this year’s tax return.
  • Another good use of your tax return is to save for retirement in an IRA account.

If you have additional questions, it’s a good idea to consult with your tax professional during your appointment. Staying organized and prepared is the best way to get through tax season, and should you receive a return – saving the money for a rainy day, your financial future, or to pay off debt is never a bad idea. Happy filing!

Article Source: Consumer Financial Protection Bureau

Don’t Make These Tax Filing Mistakes

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From math errors to missing Social Security Numbers to forms that aren’t signed, there are plenty of common tax mistakes that taxpayers can make when filing their returns. These mistakes can lead to delays in processing returns and issuing refunds. If serious enough, they might even lead to an IRS audit. Fortunately though, the IRS does allow do-overs. You can usually file an amended return if you realize that you’ve made a mistake. But that’s the problem — you might not realize you’ve made a mistake. Brush up on the following tax fails before you file, so you can avoid making the same errors this tax season.

Waiting Until the Last Minute to File

Although plenty of people put off doing their taxes, waiting until the last minute to file a tax return can backfire.  Do you really want to be scrambling to make the tax filing deadline (April 15th)? In a rush to file, you may forget to actually pay your taxes if you owe – which can result in a late payment penalty from the IRS (0.5% of taxes owed each month the payment is late). File as early as possible and avoid this headache altogether.

Forgetting to Pay Taxes on a Cashed-Out IRA

Did you cash out IRA money last year or plan to roll one over and then never did? If you forget to do this, the amount that has been cashed out is taxable. You also need to report any IRA changes on your tax return. If you forget to do this, it could result in a tax audit. And once that happens, everything will be checked with a fine tooth comb. The moral of the story: don’t forget to report any retirement account changes you made in the last year.

Mailing the Tax Check to the Wrong Agency

If you owe taxes or have a situation in which you have to pay taxes on an employee during the year (you hired a nanny to watch your children and are paying taxes on the nanny’s wages), be sure your payment is going to the right place. Failure to do this can again result in late fees and a giant headache. The same goes for electronic payments. Double check the mailing address and then check again.

Not Knowing the Filing Deadline for Businesses

Are you an S corporation? Typically, an S corporation business must file a return by the 15th day of the third month — not the fourth month, according to the IRS. Failure to file by the correct deadline could result in a file penalty fine of $450.

Not Making Estimated Tax Payments

Because self-employed workers don’t have employers to withhold taxes from their paycheck for them, they have to make estimated tax payments to the IRS throughout the year.  A good habit to get into here if this pertains to you, is to set aside money each month and try to estimate as accurately as you can – should you owe more on taxes when you file.

Forgetting to Make Tax Payments

This is a pretty straightforward one – don’t forget to make your tax payments if you owe this year. And if you are self-employed, don’t forget to send in your estimated tax payments. If you are required to send in estimated tax payments and you forget, you could receive an underpayment penalty fee.

Trying to DIY Tricky Tax Returns

If your tax situation is simple enough to file the 1040 form, you don’t need to hire a professional to prepare your return. But if you don’t have a simple tax situation and have multiple sources of income, own a home (or two), have investments, a military pension, etc. – it might be a good idea to let a professional handle filing your return for you.  A tax accountant can help you identify expenses you hadn’t previously been claiming as deductions, which can ultimately lower your tax bill. They’ll also look at your withholding with you, and see if it can be adjusted if you always seem to owe the IRS money come tax time each year. Sure – you’re going to have to pay for this service, but if you have a complicated tax return it will probably end up saving you money (and aggravation) in the long run.

More sound advice: it’s best to prepare for tax season all throughout the year. As you collect receipts, paperwork, statements, and so forth during the year – put them in a file and take them out and go over them right at the start of each new year. This way you stay on top of any changes that come up throughout the year, and aren’t digging for items at the last minute. Be prepared and organized, and filing your taxes each year will become second nature.

Article Source: Cameron Huddleston for Gobankingrates.com

3 Ways to Prepare for Next Tax Season

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Tax season is finally coming to a close. Believe it or not, it’s never too early to start thinking about next year. If filing your taxes was a headache and a hassle this year, here are a few tips to get you prepared for next time.

Get organized: Did you waste a bunch of time looking for receipts this year? Create a system, whether it’s a file cabinet or a shoebox, and keep track of those receipts and other financial documents you may need at the end of the year. Keep a tally of your charitable and retirement contributions and you’ll be ready to go as soon as you get that W-2 in the mail.

Keep track of changes: What’s happened to you this year, and what will be happening in the next few months? Are you getting married? Having a baby? Buying a house? Opening up a Roth IRA? All of these things will affect your filing status, so make sure you’re up to speed on how any of things will affect your filing process.

Be patient: Do you have a side business or do freelance work? If so, any number of hiccups can occur during tax preparation. Be prepared – but know it’s not a huge deal if you have to file an extension. If you find yourself in this boat, head on over to IRS.gov and get an extension form.

With a little preparation, you can make the tax season process a lot easier.

Article Source: John Pettit for CUInsight.com