Tax Season Tips

## Tax Season Pep Talk Tax season is just around the corner, and I’m sure you’re as excited as I am! Which means neither of us is necessarily excited about it at all. Refunds are great, sure, but many people, like small business owners or people who freelance on the side for example, end up owing the IRS at the end of the year. Even if you do get a refund, there’s something intimidating about the entire tax filing process. Maybe our opinions are influenced by the characterizations we see of IRS agents on films and TV. They never seem to be in a good mood, which makes us feel certain tax time is to be feared. I always imagine Zack Galifianakis laughing at my return à la his character in Dinner for Schmucks. Most likely, however, that’s rubbish. I’m sure no one is laughing as they process my return or yours. Taxes are part of life, without fail, every year. Instead of feeling negative about the task at hand, perhaps we can change the narrative and get excited about tax season! This is our opportunity to practice our organization and accounting, right? Right. Mindset is everything, they say, so adopting a positive outlook regarding one of the more stressful aspects of adulting is a must. Tax season is just as breezy as any other season with a bit of focus, preparation, and forward thinking. ## Tips for Navigating Tax Season The 2023 Tax Season is set to be the most stunning season designed by the IRS to date. See how I’m trying to make it fun? It’s like fashion but with taxes. Ok, I'll get serious. The best advice we can share regarding tax season is really simple: get your stuff together. ### Preparation is Paramount Hopefully, the entire year leading up to tax season has been utilized to prepare for filing your taxes. The easiest way to prepare for tax season is to do it a little bit at a time by keeping up with bookkeeping, filing away important documents as needed, and tracking any necessary deductions such as mileage or donations. Not as prepared as you’d like to be? Don’t sweat it. Carve out a few hours in your schedule per week if necessary, by time blocking until you get every item checked off your list. ### Schedule a Tax Preparation Appointment Determine whether you will need to work with a tax professional and decide which type of tax professional is right for your 2022 tax preparation. In some cases, preparing and filing your own tax return makes sense, but in some situations, it truly pays to work with a <a href="https://irs.treasury.gov/rpo/rpo.jsf">tax professional;</a><a href="#five">^[5]</a> like a tax preparer or a Certified Public Accountant (CPA). A tax preparer will help you file your taxes and usually will provide a checklist and a <a href="https://www.nerdwallet.com/article/taxes/tax-filing">secure link and filing system</a><a href="#four">^[4]</a> for you to use when sharing the necessary documents for filing. The preparer will be able to remind you about anything you might be missing, and it typically makes the process of filing your taxes a bit less stressful when working with a professional. A CPA goes a little bit more in depth when helping you file your taxes by offering advice that is unique to your situation to achieve the best possible results. This extra help can prove especially important if you own a business or do a lot of freelance work on the side. Schedule your appointment as soon as possible in order to secure ample time to work with your preferred tax preparer or CPA. You’ll want to leave time for collecting additional documentation if necessary and recommended by your tax preparer, so schedule well in advance of the deadline for filing 2022 tax returns. As an added bonus, this self-imposed deadline (the date you are set to meet with your tax preparer virtually or in person) will help motivate you to get your documents in order and your ducks in a row if you happen to be a bit of a procrastinator. No judgement, by the way. No one loves doing taxes, and it’s natural to put it off to the last minute for many people. ### Organize Your Documents Review and organize the documents needed for filing your taxes prior to your tax filing appointment. The following are a few <a href="https://www.irs.gov/individuals/steps-to-take-now-to-get-a-jump-on-next-years-taxes">common forms</a><a href="#one">^[1]</a> listed by the IRS website that are needed for filing in addition to your government issued identification: ⦁ W2s if applicable ⦁ 1099 Forms including 1099-K and 1099-MISC ⦁ Additional income statements for any gig work completed ⦁ Interest statements from investments (1099-INT) ⦁ Any additional documents you’ve received regarding income, tips, or forms marked as important or pertinent to filing your taxes including any digital assets you may have acquired or own ⦁ Form 1095-A which references your healthcare coverage for the prior tax year ⦁ Mail received from the IRS (letters, notices, anything with an IRS stamp on it) ⦁ Identity protection PIN from the IRS if you have been assigned one ⦁ ITIN number if applicable ⦁ Information about unemployment income if applicable It is super simple to create a filing system for your tax documents and add to them throughout the year as an individual. If you own a small business, however, things are a little trickier. With proper planning and a commitment to keeping up with tax preparation throughout the year, you’ll be ready to file your taxes on time. If you’re not great at organization or if keeping up with the books isn’t your jam, hire help. It is absolutely worth the expense. Hiring someone to help you organize for tax season can pay off big time, particularly if you’re a small business owner or do a lot of freelance/gig work. ## Ramp Up Your Refund There’s some good news and some bad news regarding tax refunds in 2023. Your 2022 return will not qualify for as large of a refund according to experts who note that many of the increases in refunds as well as reductions in payments owed to the IRS in the past two years were in large part thanks to <a href="https://time.com/nextadvisor/taxes/irs-warning-about-smaller-tax-refunds-how-to-prepare/">pandemic related</a><a href="#three">^[3]</a> benefits and credits. Those pandemic financial perks (calling anything pandemic related a perk is arguable) are going away this year. That means taking advantage of pre-pandemic refund strategies has never been more important. Hopefully you made your maximum contributions and purchased any final business related, write-off items prior to the end of the year. If you didn’t meet those deadlines, dig into the expenses of last year and see where you may be missing a write-off opportunity. If you’re a small business owner, the IRS has a <a href="https://www.irs.gov/credits-deductions/businesses">great guide</a><a href="#six">^[6]</a> to potential deductions for your review. If you’re an individual looking for deduction opportunities, the IRS has a similar guide tailored to <a href="https://www.irs.gov/credits-deductions-for-individuals">credits and deductions</a><a href="#seven">^[7]</a> for people filing individually. This guide is awesome if you find yourself asking the question, “what is tax deductible?” As a non-business owner, you can also review how much is being withheld from your paycheck and determine whether your strategy is still the best fit for your circumstances. Ready to receive your refund? You will gain access to your funds a bit more quickly if you opt for electronic filing and receiving your funds via direct deposit. You can always still file using traditional paper filing and receive a check, but it will <a href="https://www.consumerfinance.gov/consumer-tools/guide-to-filing-your-taxes/">take more time.</a><a href="#two">^[2]</a> ## Check Taxes Off Your To-Do List Early I don’t know about you, but over the past few years I’ve felt like I was coasting a bit. Hanging on and doing my best became my “new normal” and things need to shift back. Preparing ahead of time, hiring the right people for assistance as needed, and paying close attention to opportunities for maximizing refunds or reducing the amount owed to the IRS isn’t as daunting as it sounds if you take it step by step. Approaching the year with a step-by-step mindset is likely exactly what we all need. Taxes are something we can count on happening, but there are things we can’t predict that will inevitably come into our path as well. No matter where this year takes you, Avío Credit will always be here to lend you a hand if needed. And as we walk through the year one foot in front of the other, we can rest assured that everything will be alright a little at a time. ### Sources: <div id="one">^[1]IRS Website (Last Updated 2023, January 4).<i>Steps to Take Now to Get a Jump on Your Taxes</i> Retrieved from: <a href="https://www.irs.gov/individuals/steps-to-take-now-to-get-a-jump-on-next-years-taxes">https://www.irs.gov/individuals/steps-to-take-now-to-get-a-jump-on-next-years-taxes</a> <div id="two">^[2]<i>Consumer Financial Protection Bureau Guide to Filing Your Taxes in 2023</i> Retrieved from: <a href="https://www.consumerfinance.gov/consumer-tools/guide-to-filing-your-taxes/ ">https://www.consumerfinance.gov/consumer-tools/guide-to-filing-your-taxes/ </a> <div id="three">^[3]Gailey, Alex (2022, December 14).<i>Why the IRS is Warning Tax Payers About Smaller Refunds Next Year, and How You Can Prepare</i> Retrieved from: <a href="https://time.com/nextadvisor/taxes/irs-warning-about-smaller-tax-refunds-how-to-prepare/">https://time.com/nextadvisor/taxes/irs-warning-about-smaller-tax-refunds-how-to-prepare/</a> <div id="four">^[4]4Sabrina Parys and Tina Orem (2023, January 4). <i>Tax Filing 2023: How to File Taxes this Year</i> Retrieved from: <a href="https://www.nerdwallet.com/article/taxes/tax-filing">https://www.nerdwallet.com/article/taxes/tax-filing</a> <div id="five">^[5]<i>IRS Website Directory of Federal Tax Return Preparers with Credentials and Select Qualifications</i> Retrieved from: <a href="https://irs.treasury.gov/rpo/rpo.jsf">https://irs.treasury.gov/rpo/rpo.jsf</a> <div id="six">^[6]<i>IRS Website Credits and Deductions for Businesses A Sick Pet and An Unthinkable Choice</i> Retrieved from: <a href="https://www.irs.gov/credits-deductions/businesses">https://www.irs.gov/credits-deductions/businesses</a> <div id="seven">^[7]<i>IRS Website Credits and Deductions for Individuals </i> Retrieved from: <a href="https://www.irs.gov/credits-deductions-for-individuals">https://www.irs.gov/credits-deductions-for-individuals</a>