Tax Preparation Tips

Gather all necessary tax documents ahead of time, including:

• W-2s and 1099s for income.
• Mortgage interest statements (Form 1098).
• Investment or retirement account statements.
• Receipts for deductible expenses (medical bills, charitable donations, etc.).

Create a checklist to ensure you don’t miss anything.

Throughout the year, keep track of:

• Charitable donations: Receipts and records for cash or non-cash contributions.
• Medical expenses: Out-of-pocket costs that may be deductible.
• Business expenses: If you're self-employed, keep receipts for travel, supplies, home office, and other work-related expenses.

Organize them in folders or use apps to track and categorize your expenses.

Contributing to tax-deferred accounts can help reduce your taxable income:

• 401(k) or 403(b) contributions: The more you contribute (up to the legal limit), the less income you’ll have to pay taxes on.
• IRA contributions: You have until the tax deadline to make contributions that can count for the prior year.
• Health Savings Account (HSA): If eligible, contributions are tax-deductible, and withdrawals for qualified medical expenses are tax-free.

Tax credits reduce the amount of taxes you owe dollar-for-dollar. Some credits to look for:

• Earned Income Tax Credit (EITC): For low- to moderate-income earners.
• Child Tax Credit: Provides significant tax relief for families with qualifying children.
• Education credits: Such as the American Opportunity Credit or Lifetime Learning Credit for education expenses.

Research and ensure you qualify for all available credits.

In addition to credits, deductions can lower your taxable income. Some important deductions include:

• Student loan interest: You may be able to deduct up to $2,500 in interest paid.
• Home office deduction: If you work from home, you may be eligible for this deduction.
• Medical expenses: If they exceed 7.5% of your adjusted gross income (AGI), they may be deductible.

Decide whether it’s better for you to take the standard deduction or itemize based on which gives you a greater tax benefit.

Choosing the right filing status can make a big difference in your tax rate and deductions. Common statuses include:

• Single.
• Married filing jointly.
• Married filing separately.
• Head of household.

If you qualify, head of household status can offer higher deductions and lower tax rates than filing as single.

Filing electronically is faster and reduces errors. Additionally:

• Opting for direct deposit speeds up the refund process.
• Many tax software programs offer error checks and help you avoid common mistakes.

If you have a complex financial situation, such as owning multiple properties, running a business, or dealing with investments, consider hiring a tax professional. They can:

• Help you navigate complicated tax laws.
• Identify deductions and credits you may have missed.
• Reduce the likelihood of an audit by ensuring everything is properly filed.

Double-check:

• Your Social Security number and personal information.
• That you’ve reported all income (especially from freelance or gig work).
• Your filing status and dependent information.
• That you’ve signed and dated your return before submission.

You can make IRA contributions up to the tax filing deadline (typically April 15) and still count them for the previous tax year. This can reduce your taxable income and provide retirement savings benefits.

Keep copies of your tax returns and supporting documents for at least three years. This includes receipts, W-2s, 1099s, and documentation for deductions or credits. Having organized records is important if you're audited.

If you can’t file by the deadline, submit Form 4868 to request an extension. This gives you until October 15 to file. However, you must pay any taxes owed by the original deadline to avoid penalties.

By following these tips, you can streamline your tax preparation process and potentially reduce your tax liability. If you need further guidance on any of these tips, feel free to ask!