It’s the start of the tax season and time to begin preparing for a more organized filing. The IRS will begin accepting returns on January 23rd with a filing deadline of April 18th. Our five moves to prepare to file taxes will help you to face tax filing head-on in a stress-free manner.
1 Decide if you should do your taxes on your own or hire a professional
If you have been doing your own taxes for years, keep up to date with changing tax laws, are familiar with most tax forms, and have a good handle on your finances, you can probably do your taxes yourself. Alternatively, if you have had any major life changes that might affect your filing or your taxes seem too complex, it might be time to hire a professional. If cost is an issue, here are some options:
- IRS Free File – IRS Free File lets you prepare and file your federal income tax online using guided tax preparation, at an IRS partner site, or Free File Fillable Forms. Free File through an IRS partner site is available for taxpayers whose adjusted gross income (AGI) is $73,000 or less. They will prepare and e-file your federal tax return and you will receive an email when the IRS has accepted your return. Visit the IRS Free File site for more information or to view the IRS Free File participants.
- Free tax preparation software – Providers, such as TurboTax, H & R Block, and other major tax preparation software providers often offer free tax preparation software for tax filers with very simple tax situations.
2 Know when to file & file on time
As mentioned above, January 23rd is the day the IRS will begin to accept and process tax returns. If you have a relatively simple return and have all of the information you need to file, then file early and avoid waiting too long for a return if you are expecting one.
April 18th is the deadline to file your taxes. Because the 15th falls on a Saturday, the deadline was delayed to the 18th. If you are unable to meet the deadline to file, April 18th is also the deadline to request an extension.
3 Be strategic and you can still lower your 2022 taxes
Although we rang in 2023, you still have time to lower your 2022 taxes. Here are a few ways.
- Contribute to retirement accounts – If you have not fully funded your retirement accounts for 2022, the deadline for doing so is April 18, 2023. That is the deadline for contributions to a Traditional IRA and to a Roth IRA. If you have a Keogh or a SEP and file an extension, you have until October 16, 2023. Keep in mind that your total contributions for traditional and Roth IRA accounts are limited to $6,000 for 2022. Those age 50 and older can contribute a total of $7,000. If you are making 2022 IRA contributions after January 1, 2023, specify that it’s for 2022.
- Contribute to your Health Savings Account (HSA). Similar to a retirement account, the HSA contribution deadline for 2023 has been extended to April 18, 2023. The key to maximizing your HSA is making the full contribution every year. The maximum contribution limits for 2022 are $3,650 if you have health coverage just for yourself or $7,300 if you have coverage for the family. At age 55, individuals can contribute an additional $1000.
4 Understand all of the tax credits and deductions you may be eligible for
Deductions or credits can reduce the amount of income you owe before you calculate your taxes. Some credits may give you a refund even if you don’t owe any taxes. Here are examples of some credits and deductions. You can learn more details on each by visiting the IRS website.
- Family & dependent credits
- Income & savings credits
- Homeowner credits
- Electric vehicle credits
- Healthcare credits
- Work-related deductions
- Itemized deductions
- Education deductions
- Health care deductions
- Investment related deductions
- Business credits & deductions
Low to moderate-income workers with qualifying children may also be eligible to claim the Earned Income Tax Credit (EITC). You have three years to file and claim a refund from the due date of your tax return. If you were eligible, you can still file EITC for prior years within that three-year window.
5 Determine if it would be beneficial to itemize deductions
Finally, while it may be easier to take the standard deduction, you may save more on taxes if you itemize. Itemizing is best for those whose total qualified expenses are more than the 2022 standard deduction of $12,950 for most single filers or $25,900 for most married couples who file jointly.
Get more helpful tips like this by reading the Benchmark blog “23 Tips to Reach Your 2023 Financial Goals.”
Learn more about taxes in our “Common Tax Deductions Explained.”