By Amy Miller, AFC®
It’s tax time again and according to the Internal Revenue Service, as many as 25% of Americans wait until right before the deadline to file their returns.
Knowing there are millions still looking to prepare and file their taxes, here are a few last-minute tips to help you get everything in order to make this year’s deadline of April 18, 2023.
Getting organized can be one of the biggest hurdles at tax time. Gathering the necessary and important documents together can be a hassle but having it all in one place makes preparing to file your taxes much easier and less stressful. Some of the documents that will be necessary are:
- Last year’s federal and state (if applicable) tax returns. They are not necessarily a requirement when filing this year’s return but are a good starting point and a reminder of what you filed last year and of the documents you’ll need.
- Social Security Numbers and birthdates of everyone you will be claiming.
- W2s from any employers and all 1099s showing income from contractor/consultant work, rental properties, investments, savings accounts, etc.
- Documents related to any life events that occurred like a marriage, birth, or adoption.
Most tax documents will arrive sometime in January and are typically available online as well. It’s important to review each of them for accuracy and request corrections quickly, if necessary.
Filing Tip: Create a checklist and folder to gather these documents as they come in, so they are ready to go when it’s time to file.
Determine Possible Deductions
Deductions can help lower your tax bill by reducing your overall taxable income or your AGI (adjusted gross income). To claim a deduction, you’ll need supporting documentation. Here are a few examples of common deductions that will need documentation:
- Retirement Account Contributions – contributions to traditional IRA or self-employed retirement accounts that are within the yearly limit.
- Education Expenses – students may be able to deduct tuition, fees or interest paid on student loans.
- Healthcare Expenses – a deduction may be taken if the total of cost exceeds 7.5% of your adjusted gross income.
- Property Taxes & Mortgage Interest – both can be claimed as a deduction. You will find this information on the form 1098 your lender will send each year.
- Charitable Donations – donations can be deducted but will require receipts and statements.
Rather than itemizing deductions, most people take the standard deduction. The 2022 standard deduction is $12,950 for single filers and those married filing separately, $25,900 for joint filers, and $19,400 for heads of household.
Tax credits are often considered more valuable than deductions. These credits provide a dollar-for-dollar reduction in the amount of taxes you will owe but, like deductions, they also require documentation. Here are a few common credits available:
- Child Tax Credit – 2022’s credit is up to $2,000 per qualifying dependent under the age of 17. You may also be eligible for additional credits if you adopted a child in the year.
- Child and Dependent Care Credit – you can receive a credit for a percentage of the costs associated with child or dependent care. You’ll need a statement from the provider to file with your return showing the amount you paid for the year.
- Earned Income Tax Credit – this credit is based on the number of dependents you claim, your marital status, and how much you made in the year.
Find out more about these tax credits and more at https://www.irs.gov/credits-deductions-for-individuals.
Filing Your Return
Service members and their families have access to free tax consultants with military expertise through Military OneSource MilTax. The program, designed and offered by the Department of Defense, works around the unique circumstances service members and their families encounter throughout the year.
Tax preparation and filing are available online or in person at a VITA (Volunteer Income Tax Assistance) location. You can register online, call or live chat 24/7 to schedule a consultation or in-person assistance.
Request an Extension, if needed
If you find yourself unable to meet this year’s April 18th deadline, you’ll need to request an extension to avoid penalties. An approved extension will push your deadline back to October 16, 2023. Service members’ deadlines are automatically extended when deployed to a combat zone or in support of military operations.
It is important to note that an extension only pushes back the due date for filing and does not give you extra time to pay any taxes you may owe. You can learn more about filing an extension on the IRS’s website.
Already filed and wondering where your refund is. You can check the status of your refund using the IRS’s Where’s My Refund tool on IRS.gov.