Tax season. No matter how financially responsible an individual is, the mere mention of it can send shivers down their spine. After all, there’s nothing more stressful than meeting deadlines, tackling mountains of paperwork, and possibly being audited.
The problem is, you can’t just crawl under the covers and wait for tax season. If you fail to file your taxes on time, you may have to pay a penalty. Also, if you’re eligible for a refund, you may have to wait longer to receive it.
The good news is that rather than panicking, with a little organization and planning, tax season can be transformed from a chaotic scramble into an approachable (and even stress-free?) procedure. Throughout this blog post, you’ll find tips, tricks, and strategies for staying organized, saving money, and confidently preparing your tax return.
The Pre-Season Prep
Like any athlete training for a new season, effective tax planning also requires pre-season preparation. With that said, the following steps can help you get in tip-top tax shape:
- Get your supplies ready. The first step? Gather all the necessary documents. This includes your W-2s, 1099s, receipts for deductible expenses, and any other tax-related documents you have received this year. Do not forget to include records of charitable donations, medical expenses, or other possible deductions or credits. Come tax season, having a dedicated folder or digital filing system for these documents will save you a lot of time and frustration.
- Become familiar with your tax situation. Spend some time learning about the current tax code and any changes that may affect you. There are several user-friendly tax information websites and apps available, including the IRS website.
- Decide how you want to file. Do you plan to prepare your taxes, use tax preparation software, or hire a tax preparer? Each option has advantages and disadvantages. When deciding whether to proceed, consider your level of comfort, the complexity of the tax code, and your budget.
Get Your Calendar Ready For Tax Preparation
Being overburdened with a large, vague task can be highly stressful. One way to combat this feeling? Have a plan.
In this case, you should mark important dates on your calendar. An example would be when you follow up with employers or banks about missing tax documents. You should also mark your calendar for April 15, 2024, when many state taxes are due. You can file an extension if you can’t file your taxes by April 15, 2024. That gives you until October 15, 2024, to file your federal and state taxes.
Additionally, schedule time in your calendar to organize your receipts, prepare tax forms, and meet with your accountant (if you have one). The sooner you start, the better, so you don’t end up overwhelmed in April when you have to do all your taxes at once.
Declutter and Digitize
There is no doubt that paperwork is the bane of every taxpayer’s existence. However, you can avoid drowning in receipts by following these strategies:
- Go paperless. Many employers and financial institutions now send W-2s and other tax documents electronically. When possible, opt for paperless statements to reduce clutter and simplify recordkeeping.
- Embrace scanning. Rather than keeping hard copies of receipts or documents, scan them digitally and store them securely in your cloud or computer. As a result, you’ll have easy access to electronic backups.
- Utilize tax software. W-2s and other documents can be imported electronically into many tax preparation software programs, eliminating the need to enter them manually.
Maximizing Deductions — Don’t Leave Money on the Table
You can reduce your taxable income quickly and easily by taking deductions. The following tips will help you maximize your deductions:
Standard vs. Itemized deductions.
Calculate your savings by comparing the standard deduction offered by the IRS with your itemized deductions.
For your information, the standard deduction for married couples filing jointly in 2024 will rise by $1,500 to $29,200. It will increase by $750 from 2023 to $14,600 for single taxpayers and married individuals filing separately. The standard deduction for heads of households will increase by $1,100 for the tax year 2024.
Do you plan on itemizing? Make a start on organizing your expense receipts from the past year. The best way to combine digital and hard copies is to save them into your phone’s photo albums and sort them accordingly. This will keep them all in one place.
Also, if you take the standard deduction, skip gathering receipts altogether and just sit back and relax.
Maintain detailed records.
Keep a record of your deductible expenses throughout the year. You can use a budgeting app, a notebook, or even a spreadsheet to track your spending.
The most common deductions.
Don’t forget commonly overlooked deductions, either. Among these are charitable contributions, home office expenses (if you work from home), and business mileage driven.
Check your filing name with your social security card, for example, if you got married. Or, if you moved, make sure to update your address when you file. Your next decision is how you’ll file this year with your spouse. Whether you file jointly or separately depends on your marital status.
Review major life changes.
The impact of significant life events like marriage, a child, or buying a house on your tax filing can be significant. As such, any additional documentation needed should be prepared.
Filing Strategies for Different Taxpayers
There is no one-size-fits-all approach to tax season. For different taxpayer situations, here are some specific filing strategies:
- A self-employed individual. Be meticulous about keeping track of your business’s income and expenditures. Any expenses related to home office expenses, mileage driven for business, and other relevant costs should be tracked.
- Homeowners: If you itemize deductions, you may deduct the interest on your mortgage, property taxes, and certain home improvement costs.
- Investors. Be sure to gather documentation of any investment income or losses. This includes brokerage statements, dividends received, and sales of securities.
- Students. Tax credits such as the American Opportunity Tax Credit and Lifetime Learning Credit may be available if you paid qualified education expenses.
Taking Control of Your Tax Return
You are ready to file your tax return when all your documents have been gathered and deductions have been identified. For filing, you have several options:
- Do-It-Yourself (DIY). The IRS website provides free tax filing tools for those who are comfortable filing their own taxes.
- Tax software. You can maximize deductions by using user-friendly tax software like Turbo Tax or H&R Block.
- Tax professional. You should consult a tax professional when your tax situation is complex or uncertain.
Submitting Your Return
You’re ready to strategize after gathering your documents and choosing a filing method. The time has come for you to submit your taxes and conquer tax day! However, here are a few things to keep in mind:
- Be sure to double-check everything. Check your return one last time before hitting submit. It is possible for mistakes to cause delays and even penalties.
- Choosing a filing option. Your return can be filed electronically, by mail, or in person. In general, e-filing is the fastest and most secure method.
- Getting a refund and making a payment. In most cases, the IRS will directly deposit your refund into your bank account within a few weeks. To avoid penalties, you must submit your taxes by the deadline.
Conquering Tax Day – Putting it All Together
Throughout tax season, here’s a timeline to keep you on track:
- Early January. Throughout the year, gather receipts and documents, but begin consolidating them early in January.
- Mid-February. Learn about tax law changes and new deductions available to you.
- Early March. To ensure you have the latest tax forms and calculations, download the latest versions of tax software or file yourself.
- Mid-March to Mid-April. Get your W-2s, 1099s, and other income statements together. Be sure to compile all your deductions and have the necessary documentation on hand.
- Mid-April. The fastest and most secure option for filing your tax return is to use electronic filing. To avoid penalties, pay your taxes by the deadline.
Post-Season Review and Planning for Next Year
Preparing for tax season is much easier when you stay organized throughout the year. Also, you’ll save a lot of time if you make certain tasks a habit. Whenever you collect receipts, for instance, label them with the reason for the expense.
Instead of putting them in a folder to sort later, sort them on the spot. Better yet, scan and sort them digitally. And, consider adding your tax season schedule to your calendar to save time and stress in the future.
FAQs
Why should I get organized for tax season?
Staying organized will save you time and stress when tax time rolls around. When all your documents are in one place, you won’t have to scramble to find them last minute. In addition, it can help you keep track of any deductions and credits you qualify for.
When are taxes due?
Most taxpayers must file their federal tax returns by Monday, April 15, 2024.
Taxpayers residing in Maine and Massachusetts have until Wednesday, April 17, 2024, to file because of Patriot’s Day (April 15) and Emancipation Day (April 16).
Also, many parts of the U.S. have been affected by severe weather. As a result, residents and businesses in Connecticut, Maine, Rhode Island, and West Virginia have until June 17, 2024, to file their federal income tax returns in disaster areas declared by the Federal Emergency Management Agency (FEMA).
FEMA’s website contains a complete list of federally designated disaster sites.
When are state taxes due?
A majority of state taxes will also be due on April 15, 2024. The following states, however, have different deadlines:
- Massachusetts: April 17, 2024
- Maine: April 17, 2024
- Hawaii: April 22, 2024
- New Mexico: April 30, 2024 (only for e-returns)
- Oklahoma: April 20, 2024 (only for e-returns)
- Delaware: April 30, 2024
- Iowa: April 30, 2024
- Virginia: May 1, 2024
- Louisiana: May 15, 2024
Among the states that don’t collect income taxes are Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming.
If you would like the most up-to-date information, contact your state’s Department of Revenue.
How do I extend my taxes?
Extensions are still available if you cannot file your individual taxes by April 15, 2024. When you file for an extension, your state and federal taxes are due on October 15, 2024.
When will I get my refund?
According to the IRS, you can expect your refund within 21 days after filing your federal return electronically. You will also receive your money much faster if you enroll in direct deposit.
The processing time may be longer if your return has issues or if it was filed on paper.
Image Credit: Nataliya Vaitkevich; Pexels
John Hall
John Hall is the co-founder of Calendar a scheduling and time management app. He’s also a keynote speaker that you can book at http://www.johnhallspeaking.com.