6 Tips for Preparing Your Taxes in 2023

As the new year begins, it's time to start thinking about tax season once again. 

Preparing your taxes can be time-consuming and sometimes overwhelming, but taking a few steps to prepare can help make the process much smoother. 

With the recent changes in tax laws and the ongoing pandemic, tax season in 2023 may present some unique challenges.

However, by staying organized, reviewing changes to tax laws, and considering the help of a professional, you can be well on your way to a stress-free tax season. 

In this blog post, we'll discuss six tips for preparing to do your taxes in 2023, from gathering necessary documents to planning for next year's taxes. 

By following these tips, you can ensure that your taxes are prepared accurately and on time while potentially saving money in the process.

Gather all necessary documents

The first step to preparing your taxes is gathering all necessary documents. 

This includes any tax forms you received in the mail, such as W-2s, 1099s, and 1098s, as well as any receipts or other documents related to your income and expenses for the year.

It’s a good idea to keep these documents organized throughout the year so that you don’t have to scramble to find everything when it’s time to do your taxes. 

Consider creating a folder or file specifically for tax-related documents and keep it up to date throughout the year.

If you’re missing any necessary documents, such as a W-2 from an employer, reach out to the relevant parties to get a copy as soon as possible. 

Waiting until the last minute to gather your documents can lead to stress and errors, so starting earlier is best.

Review changes to tax laws

Tax laws can change yearly, so review any changes that may affect your tax situation is essential. 

For example, in 2021, the American Rescue Plan Act provided economic stimulus payments to eligible taxpayers, and it’s possible that similar provisions could be enacted in 2022.

Additionally, the Tax Cuts and Jobs Act of 2017 made significant changes to the tax code, including changes to deductions and tax rates. 

Review any changes affecting your tax situation and adjust your preparation accordingly.

Reviewing any tax credits or deductions, you may be eligible for is also a good idea. For example, if you’ve made charitable contributions throughout the year, you may be able to claim a deduction on your taxes. 

Reviewing these credits and deductions early can help you plan your finances and save money on your taxes.

Consider hiring a professional

Preparing your taxes can be complex and time-consuming, and navigating the tax code independently can be challenging. 

If you’re unsure how to prepare your taxes or have a particularly complex tax situation, it may be worth considering hiring a professional to help.

Tax professionals, such as accountants and tax preparers, are trained to navigate the tax code and can help ensure you maximize your deductions and credits while minimizing your tax liability. 

They can also help you avoid mistakes that could result in penalties or additional taxes owed.

If you decide to hire a tax professional, do your research and choose a reputable provider. 

Look for licensed professionals with experience working with taxpayers in similar situations to your own. 

You may also ask for referrals from friends or family members who have previously worked with a tax professional.

Keep track of any life changes

Any significant changes in your life can impact your tax situation. 

For example, if you got married, had a child, bought or sold a home, started a business, or changed jobs in 2022, these events can all impact your tax situation. 

Keep track of any life changes and understand how they may affect your taxes.

Use tax software or online services

If you’re comfortable using technology, tax software or online services can be a convenient and cost-effective way to prepare your taxes. 

Many tax software programs guide you through tax preparation and can help identify potential deductions and credits you may have missed.

Some online services, such as TurboTax or H&R Block, offer a free version for simple tax returns and can be a good option for those with straightforward tax situations. 

If your tax situation is more complex, you may need to upgrade to a paid version or seek the assistance of a tax professional.

Plan for next year

While preparing for this year’s taxes, planning for next year is also important. 

Consider adjusting your tax withholding or estimated tax payments to ensure you’re not overpaying or underpaying your taxes throughout the year. 

This can help you avoid a large tax bill or penalty at tax time.

Additionally, consider taking steps throughout the year to maximize your tax savings. 

For example, if you’re eligible to contribute to a tax-advantaged retirement account, such as a 401(k) or IRA, consider making contributions throughout the year to reduce your taxable income.

By following these six tips, you can confidently prepare for tax season in 2023.

Whether you hire a tax professional or use tax software, staying organized and keeping track of essential documents and life changes can help ensure that your taxes are prepared accurately and on time. 

Additionally, planning for next year can help you avoid surprises and maximize your tax savings.