Are you ready for tax season?

In financial terms, the first quarter of the year is when tax season preparation heats up. According to the Internal Revenue Service (IRS), about 85 million taxpayers pay experts to complete and submit their tax returns. If you’re one of them, it’s important to organize your forms, receipts, and other documents well before tax time.

Your tax preparer may ask you to fill out a questionnaire or take information directly from you. Either way, some planning ahead will help you get through the whole process easily and quickly. This holds true for those who do their own taxes too, as the steps below will help them get organized.

Without further ado, here are 8 tax season preparation steps!

1. Choose a Tax Preparer

If you don’t have a tax preparer yet, a great way to find one is to ask friends or advisors (like an attorney you know) for referrals. Make sure that the one you choose has a preparer tax identification number (PTIN), which is basically proof that they are qualified to prepare federal income tax returns. An experienced professional can help you prepare for tax season, reducing stress.

The next important thing to do is to ask how much they charge in fees. This obviously depends on the complexity of your return. Avoid working with a company that charges a percentage of your refund. The IRS website provides some tips for choosing a preparer, and there’s also a link that can help you find preparers by location and credentials.

2. Schedule an Appointment

The next step you may want to take to prepare for tax season is to schedule an appointment. The sooner you meet your expert, the sooner you should be able to fill out your tax return—even if you decide to apply for an extension. This is also helpful if you anticipate a refund, as it can help you get it sooner.

If you wait too long to book an appointment with a preparer, you may risk missing the filing deadline. This means you could lose the chance to lower your tax bills, such as by claiming a deduction for a health savings account (HSA) or an individual retirement account (IRA).

3. Gather Your Documents

The next step in tax season is to collect all tax documents you have from your employer, bank, and other financial institutions. Keep in mind that if you have a side gig or sell things online and get paid via a payment network like PayPal, the payment network won’t send you a Form 1099-K unless you make at least $20,000 in a year, according to the IRS.

In this case, it’s important to keep your records yourself so you can easily report all your income. If your side gig makes a minimum of $600, you’ll receive a Form 1099-MISC. For earning under this amount, you won’t receive a Form 1099-MISC, but you must still report all income. Also, make sure that your social security numbers are correct.

4. Round Up Your Receipts

The receipts you’ll have to provide depend on whether you claim the standard deduction or itemize your deductions. The best thing to do before tax season is to choose whichever brings the biggest deduction, and the only way to know for sure is to add up your itemized write-offs and compare the number with your standard deduction.

For the 2022 tax year, the standard write-off for single taxpayers is $12,950, and for married couples filing jointly, it is $25,900. This amount increases in 2023 to $13,850 for single taxpayers and $27,700 for married couples filing jointly.

Make sure you also have the receipts for investment-related expenses, property taxes, and medical costs not reimbursed by insurance or covered by any other health plan (such as an HSA or a flexible spending account). All of the above are subject to limits, but if they are substantial enough, it could be worthwhile to itemize.

If you itemize your write-offs, you will also need to gather any backup you have for charitable contributions. For instance, if you’ve donated $250 or more, you need to have a written acknowledgment from the charity indicating the amount and stating that you didn’t receive anything in return (token items are excluded). If you don’t have one, get in touch with the charity and request one. The last day of the tax season is April 18, 2023, so make sure you do it on time.

If you have business expenses and income to report on Schedule C, you will have to share your receipts for expenses, records and books, such as the accounting system, and relevant bank and credit card statements.

5. List Your Personal Information

Here’s one tax season step that most people tend to overlook. You probably know your Social Security number, but do you know the Social Security number of your spouse, or any dependent you claim? This may seem like a minor detail, but it is actually important. Financial experts suggest writing those down, along with any other information your preparer is likely to need. Make sure you keep them in a safe place.

If you own a rental property or vacation home, for instance, note the addresses. If you recently sold a property, make a note of the dates you purchased and sold it, how much money you received from the sale, and the amount you originally paid for it.

Keep reading to discover other ways to get ready for tax season!

6. Update Your Withholding or Self-Employment Payments

Did you receive a refund in the past year that seemed quite large, or do you expect to get one this year? If that’s your case, chances are you may have needed to adjust the amount of money you are withholding from your paycheck, as it might be more than necessary. Basically, you’re giving Uncle John an interest-free loan out of your pocket. You can fix this by completing Form W-4 and giving it to your employer.

If you’re self-employed, you should make sure that your quarterly payments weren’t too small or too large last year. If so, make the proper adjustment to fit this year’s requirements. Payments that are too small usually result in penalties from the IRS, while too-large payments reflect money that isn’t earning interest for you.

7. Find a Copy of Last Year’s Return

If you work with the same preparer you worked with last tax season, they will likely have most of your information. If you use a new tax preparer, last year’s return may remind you and your preparer of some things you don’t want to overlook. Here are two examples:

• Interest and dividends: Last year’s tax return should indicate which mutual funds, banks, and other financial institutions sent you 1099 forms. Compare the list with this year’s situation: Have you received 1099s from them again this year? This obviously isn’t the case if you sold the investments or closed those accounts in the meantime.
• Charitable deductions: Everything we said in No. 4 remains valid here as well.

8. Decide Whether to File for an Extension

If you need more time to get ready for this tax season, you can ask for an extension until October 15, 2023, to file your return. However, you will still need to estimate the amount of tax you owe and pay it by the standard April deadline to avoid interest and penalties.

When Is the Deadline?

The last day of the tax season is typically April 15, following the tax year. However, you have until Tuesday, April 18th, 2023, to file your 2022 tax return, as Monday, April 17th, is Emancipation Day in Washington, D.C., and also Patriot’s Day in Massachusetts and Maine.

Since it’s tax season, here’s another article you may find helpful All About Tax Refunds: 7 Important Things You Need To Know.