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Not sure how to get started with your taxes? This will help.
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I haven’t done a poll on this, but I think it’s fair to say there are few things people universally dislike as much as filing their taxes. Yes, you might have a refund check to look forward to at the end, but by the time you’re done slogging through hundreds of obscure questions about your financial activities, even that doesn’t always feel like an adequate reward.
Unfortunately, there’s no way to avoid doing your taxes unless you like the idea of playing a high-stakes game of hide-and-seek with the IRS. But there are things you can do to make tax season a little easier on yourself. Consider taking these three steps right now, even if you’re not up to filing your return yet.
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1. Follow up with your employer if you haven’t gotten your tax forms yet
Employers are legally required to mail your W-2s and 1099s to you by Jan. 31, so you should have already gotten yours by now. If you haven’t, something probably went wrong. It could be that your employer had an old address for you on file and the form never made it to your new home. Or maybe you just misplaced it. Either way, you’re not going to get very far on your taxes without this key piece of information.
Check with your company’s HR department if you haven’t received a copy of any necessary tax forms or if you believe you may have lost yours. Now’s also a great time to verify the information it has on file for you if anything’s different from last year, like a name change or a new address.
2. Gather the documentation you need for any tax breaks you plan to claim
You don’t have to submit documentation to prove the tax deductions and credits you’re claiming for the year, but you are expected to have them on hand. The IRS can demand to see your proof whenever it wants and if you don’t have it, it can disallow the deductions. So a paper trail is a must.
The deductions and credits you qualify for will depend on what’s happened in your life in 2022. But some common things to keep track of are:
Contributions to retirement accounts, including the type of retirement account and amount contributedReceipts for large medical billsContributions to education savings accounts that might qualify you for a state tax breakReceipts for items you purchased for an owned business or side hustleReceipts for higher education expensesReceipts proving any charitable donations you madeHealth savings account (HSA) contributions
Put all these documents in a folder where you’ll have them readily accessible when you file your tax return. Once you’re done with your taxes, keep this information somewhere safe. The IRS recommends holding onto your tax documents for at least three years and up to seven years if you file a claim for a loss from worthless securities or a bad debt deduction.
3. Note what you’ve paid in estimated taxes, if you owe them
Business owners and those with side hustles are responsible for paying estimated taxes quarterly. These are usually due April 15, June 15, Sept. 15, and Jan. 15 of the following year. If one of these dates falls on a weekend or holiday, the deadline is the following business day.
You need to indicate how much you’ve paid in estimated taxes on your return or else the government may try to charge you penalties for unpaid or underpaid estimated taxes. If you haven’t kept track of this already, go back and look it up. If you write a check or have the money taken right out of your bank account, you should be able to comb through your bank statements to find this information. Be sure to note how much you’ve paid to both your state and the federal government.
If completing these three tasks is all the tax work you can handle for now, pat yourself on the back and call it a day. But try not to put your taxes off for too long. Not only will this delay your refund check’s arrival in your bank account, but it can also put you at risk of tax identity theft. And that could create even bigger headaches for you. Filing your taxes promptly is the best way to avoid this and truly put your taxes behind you for another year.
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