For many people, tax season can be stressful and complicated. Make 2022 the year that you feel confident tackling tax season. Here are some of the top tax preparation tips so that tax filing will be a breeze.
Tax Preparation Tips
1. Choose How to File
There are three different ways to file taxes, including filing by hand, filing online, or hiring a tax preparer to help with tax preparation. Unless your taxes are extremely simple, it’s best to file online or work with a tax professional.
If you’ve filed your taxes in the past using tax software, you’re well aware of how to prepare and file online. What’s even better is that many of these platforms have access to human preparers as well.
The other option is to hire a tax preparer. Though it may be easier to file taxes on your own, if you have a more complicated tax situation, it may be best to hire someone to do the work for you. You don’t want to risk missing something and filing incorrectly.
For business owners or those with a side gig, seeking professional guidance is safest. You can work with a tax professional in person, which makes the process convenient.
2. Know How Taxes are Determined
How much tax you owe is determined by dividing your taxable income into tax brackets. Each bracket is taxed at a corresponding tax rate. No matter which tax bracket you’re in, you won’t pay tax on your entire income.
The U.S. tax system is progressive. This means that people with higher taxable incomes pay higher federal income tax rates and people with lower taxable incomes pay lower rates.
3. Gather Your Filing Information
No matter how you’re filing, you’ll need to gather your tax filing information. You’ll want to gather proof of income, tax-deductible expenses, and proof that you’ve paid taxes throughout the year.
Some tax documents that you’ll need to gather include:
- Social Security Number for you, your spouse, and any dependents
- W-2 form
- 1099 forms
- Property taxes
- Mortgage interest forms
- Retirement account contributions
- Charitable donations
- Educational expenses
- State and local taxes that you’ve paid
- Last year’s state and federal tax returns
Gather all of these documents sooner rather than later. Then, you won’t have to scramble at the last minute to find the information you need to file.
4. Settle with the IRS
If you owe, make a plan for how to pay the IRS. There are many options, including wire transfers, electronic payments, checks, and debit and credit cards. If you’re unable to pay all at once, consider setting up a payment plan through the IRS.
The agency offers short and long-term payment plans, many of which are spread out over a few months.
If you’re expecting a refund, you might want to make sure that you get your money as quickly as possible. Avoid filing on paper, as this format takes six to eight weeks to be processed by the IRS. Online filings are processed faster, which means that you’ll receive your refund faster.
Make sure that you choose to have your refund sent by direct deposit. Waiting for a check in the mail can delay the process for weeks.
With these tax preparation tips, you can make 2022 tax filing a breeze. The accounting team at Satty, Levine & Ciacco, CPAs. P.C. is here to help you this tax season. Visit our website to get started today!