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As the calendar flips to a new year, it’s time to turn our attention to one of life’s certainties: taxes. While the mere thought of tax season may induce stress, a well-prepared approach can turn the experience from daunting to manageable. To help you navigate tax season, here’s a comprehensive guide on getting your taxes ready in the new year.
Gather Your Documents
Start by collecting all the necessary documents. This includes W-2s from your employer, 1099s for any freelance or contract work, and any other income-related documents. Additionally, gather receipts for deductible expenses, like charitable donations, medical expenses and business expenses.
Organize Your Financial Records
Efficient organization is the key to a smooth tax preparation process. Create folders for various categories, including income, expenses and deductions. This will save you time and reduce the likelihood of overlooking crucial details.
Update Personal Information
Ensure that your personal information, such as your name, address and social security number, is up-to-date. Any discrepancies could result in delays or complications with your tax return.
Explore Changes in Tax Laws
Tax laws can change from year to year, so it’s crucial to stay informed. Familiarize yourself with any updates that may affect your tax situation. Tax software and online resources can be valuable tools for staying current.
Review Eligibility for Deductions and Credits
Be aware of potential deductions and credits you may qualify for. Common deductions include student loan interest, mortgage interest and educational expenses. Tax credits, such as the Child Tax Credit or Earned Income Tax Credit, can also significantly impact your tax liability.
Consider Retirement Contributions
Contributing to retirement accounts, including a 401(k) or IRA, can not only help secure your financial future but may also reduce your taxable income. Check the contribution limits and make any last-minute contributions before the tax year closes.
Evaluate Health Insurance Coverage
Ensure you comply with health insurance requirements, as mandated by the Affordable Care Act. Be prepared to report your coverage on your tax return and understand any penalties that may apply if you are uninsured. Note: You won’t need an exemption to avoid the penalty unless you live in a state that requires you to have health coverage and you don’t have coverage (or an exemption). Then you’ll be charged a fee when you file your 2022 state taxes.
Explore Filing Options
Determine the most suitable method for filing your taxes. While many opt for tax preparation software or professional services, others may choose to file independently. Each option has its merits, and the right choice depends on your current situation and comfort level.
Plan for Refunds or Payments
If you anticipate a tax refund, plan how to use the funds wisely. Consider paying down debt, saving for future goals or investing. On the other hand, if you owe taxes, plan how to cover the amount owed to avoid penalties and interest.
File Early
Don’t procrastinate. Filing your taxes early not only provides peace of mind but also helps prevent identity theft. By submitting your return promptly, you reduce the window of opportunity for someone else to file a fraudulent return using your information.
The Corporate Capital, Inc. Difference
Remember, preparing your taxes doesn’t have to be a daunting task if you plan ahead, but if you do find that you need help filing, Corporate Capital, Inc. is here to help. Based in Las Vegas, Nevada, our team of licensed professionals and legal experts can help you navigate your taxes with ease. We invite you to speak to a member of our team by calling 855-371-0070. Before you know it, your 2022 taxes will have been filed and you will be ready for another productive year!