Tax season can be a challenging time for both individuals and businesses, but with a little proactive planning, you can avoid the last-minute rush and headaches that often come with filing. Here are ten essential tips to help you get a head start, stay organized, and make your tax filing process as smooth as possible.
1. Start Early and Set a Timeline
Begin your tax prep early to give yourself ample time for gathering documents, consulting professionals, and correcting any issues that may arise. Break the tasks into manageable steps by creating a timeline, with specific goals for each week. Mark key deadlines, especially the tax filing deadline in mid-April (April 15, 2025) for most individuals. (March 15 deadline for S-Corps and Partnerships; and October 15 for returns on Extensions.)
2. Organize Your Documents in Advance
Being organized is one of the most effective ways to reduce tax-time stress. Start by creating a checklist of essential documents you’ll need, such as:
Income documents (W-2s, 1099s, investment income statements)
Receipts for deductions (medical, charitable contributions, business expenses)
Bank statements and credit card records for tracking business-related expenses Consider using a digital tool or app to scan and store your receipts and documents for easy access. Digital storage is not only more convenient but also helps you keep all necessary documents in one place.
3. Review Last Year’s Return
If your finances haven’t changed dramatically, last year’s tax return can serve as a great reference point. Review the forms, deductions, and credits you claimed last year to make sure you’re not missing anything. A quick look back can also remind you of important documents to gather and areas where you might be able to claim similar deductions this year.
4. Stay on Top of Common Deductions and Credits
Knowing which deductions and credits you’re eligible for can make a big difference in your tax liability. Here are a few commonly missed ones:
Home office deduction for self-employed individuals
Charitable contributions (cash or items donated to qualifying charities)
Medical and dental expenses if they exceed a certain threshold of your income
Educational credits like the American Opportunity Credit or Lifetime Learning Credit Make sure you keep detailed records for these deductions, as the IRS may request proof if you’re audited.
5. Track Business Expenses Carefully
If you’re a business owner or self-employed, accurate records of your business expenses are essential. Some common deductions include:
Office supplies, equipment, and software
Advertising and marketing expenses
Business travel expenses
Vehicle expenses if used for business purposes Maintain organized records of each transaction and consider using accounting software to track your business expenses throughout the year. This will make filing your taxes easier and more accurate.
6. Check for Any New Tax Law Changes
Tax laws can change frequently, and staying informed is essential to avoid missed deductions or unexpected tax bills. Each year, review the latest IRS guidelines or consult with a tax professional to stay up-to-date on new rules. For instance, recent changes may affect deduction limits, eligibility for credits, or even income tax brackets.
7. Prepare for Estimated Taxes if Self-Employed
If you’re self-employed or a freelancer, you likely need to make quarterly estimated tax payments. These payments help prevent large tax bills (and penalties) at year-end. Set aside a percentage of your income each month to cover these taxes, and make sure to submit payments on time—typically in April, June, September, and January.
8. Double-Check Your Tax Forms for Accuracy
It’s critical to review all of your tax forms, including W-2s, 1099s, and other income statements to ensure accuracy. Even small mistakes can delay the processing of your return or result in additional tax due. If you find any discrepancies be sure to contact the relevant party immediately to get a corrected form.
9. Consider Hiring a Tax Professional
If your tax situation is complex or you’re unfamiliar with recent changes, a tax professional can offer invaluable expertise. They can help you identify deductions you may not be aware of, ensure compliance with tax laws, and even save you time. Additionally, a tax advisor can help you with planning strategies to minimize your tax liability in the future.
10. File Electronically and Use Direct Deposit for Faster Refunds
Filing your return electronically is faster, more accurate, and more secure than filing by paper. Additionally, choosing direct deposit for your refund can shorten the waiting time significantly. E-filing with direct deposit is generally the quickest way to receive any refunds you may be due.
It’s never too early to prepare for Tax Season
By taking a proactive approach, you can make tax season a far less stressful experience. Start early, stay organized, and keep these tips in mind as you prepare. Whether you’re filing for yourself or your business, a little preparation can help you save time, maximize deductions, and reduce the risk of errors. Here’s to a smooth tax season!
2022 Tax Deductions and Tax Exemptions
Standard Deduction
Single: $12,950
Joint returns & surviving spouses: $25,900
Married filing separately: $12,950
Head of household: $19,400
The standard deduction increases by $1,400 for a married taxpayer aged 65 or older or blind ($2,800 if both 65 and blind); by $1,750 for a single taxpayer aged 65 or older or blind ($3,400 if both 65 and blind).
Personal Exemptions: Suspended through 2025
No personal exemption is allowed to an individual who is eligible to be claimed as a dependent on another taxpayer’s return.
If you own a small business, you need an accountant. Small business owners tend to file their taxes with a free online tax services year after year, but a digital solution can only take you so far. A tax accountant, or should we say a real accountant is an essential part of your small business team.
But why make the switch now? COVID-19.
Various COVID relief bills were passed in 2020 and 2021, which mostly affected the small business sector. With these new bills and laws, some of the previous ones passed were then overturned, making this years 2020 business taxes a little more complex. You certainly want to talk to an accountant if your business qualified for some of the various forms of government and private support and tax benefits this year.
The various forms of government assistance and tax benefits announced in 2020 were unbelievably confusing.
Here are just a few of the government programs and policies that might affect your 2020 small business taxes:
Paycheck Protection Program
Economic Injury Disaster Loans and EIDL loan advances
Employee Retention Credit
Any support from other governments or organizations
But a good accountant is more – much more – than a tax preparer. A good accountant is your small business advisor, not just a tax advisor. He or she should be able to help you deal with all the major financial issues your small business faces and advise you on how to insure your personal financial well-being. Our accountants at Loeffler Financial Group can help guide you on how to handle the financial matters, including the accounting and money handling systems of your business. Our team also will help guide you on ways to structure investment, personal loans, and losses to get not only the best tax treatment but to better manage my cash flow.
What kinds of taxes will I have to pay? What are my tax deadlines?
How can I reduce my taxes?
Which expenses are deductible, non-deductible or have to be depreciated?
What kind of bookkeeping system should I set up?
How can I set up systems to reduce the possibility of theft or embezzlement?
How should I pay myself and what are the tax implications?
Should I use the cash or accrual form of bookkeeping?
Do I need to keep track of inventory? If so, what method do I use?
How do I handle payroll and payroll taxes?
Do I have to collect sales tax? When? From whom?
What kind of retirement program can I set up and how much can I contribute each year?
What other accounting and tax considerations are there for my type business?
A good small business accountant can save you more money in the long run, and help you lower your taxes! Although the deadline for taxes has been extended to May 17, 2021, you want to start gathering your files, and book your appointment today!
