Make Tax Time a Happy Time!

Vida Jatulis, Taxes

Make Tax Time a Happy Time!

Sorry for this dose of reality! It is March…that means you have just about 5 weeks left to get organized and submit your tax return.  The tax deadline is April 18, 2023 (some taxpayers in disaster areas in California, Georgia and Alabama have an extended deadline).

Gathering all your documents is crucial to complete a tax return free of mistakes. As life gets more complicated this can become a daunting task.  Some forms may come in the mail and others you may need to find online.  It is a good idea to keep all your tax documents in one place by creating a physical or digital folder.  To help you get organized here is a list of key documents you may need to complete your tax return.

  • Form W-2 is provided by your employer, it shows how much you were paid, how much you withheld for taxes and benefits provided.
  • Form 1098 shows how much you paid in interest on a mortgage or student loan.
  • Form 1099 reports income that you made working as an independent contractor or from unemployment benefits.
  • Form 1099-INT reports savings account interest earnings.
  • Form 1099-DIV is sent to investors who receive dividends and distributions.
  • Form 1098-T is a tuition statement for higher education expenses.
  • Form 1099-R reports distributions from pensions, annuities, retirement plans etc.
  • Records for any stocks or other investments you sold in 2022, including crypto transactions or other digital assets. You will need the cost basis (what you paid for the investment) so that you can calculate the gain or loss on the investment.
  • K-1 reports partner’s income, losses, gains and dividends.
  • Documents, forms, and receipts to help you decide if you should itemize your deductions.

The value of a tax return does not end on the day you file it!  Make the last step in your tax filing process setting aside time to review your return and plan for 2023.  Since most tax moves need to be made by December 31st of the tax year, you have the rest of the year to implement a plan.  Some things that you may want to review and plan for are as follows:

  • Did you take the standard deduction? If so, consider whether bunching charitable contributions and/or certain expenses into one tax year may allow better itemization.
  • Are you married? If so, compare filing your taxes Married Filing Jointly vs. Married Filing Separately you may be able to reduce your tax liability.
  • Did you have AMT? If so, review strategies to reduce AMT, such as minimizing capital gains or lowering income by maxing out retirement plan contributions.
  • Did you owe more tax, or did you receive a refund? If so, review your withholdings or estimated payments and make adjustments.
  • Do you have dependents? If so, consider if you can claim the Child Tax Credit and/or Dependent Care Credit.
  • Is someone in your household in college? If so, consider if you can claim the Lifetime Learning Credit or American Opportunity Tax Credit.
  • Are any interest and dividends being reported? If so, consider if the interest is taxable or tax-exempt and if dividends are ordinary or qualified.
  • Did you report capital gains (or losses)? If so, be sure that you consider any carryover to future returns.

There are a couple of tax moves you still have time to make to impact your 2022 return.

  • Contribute to an IRA if you are eligible, you have until April 18, 2023.
  • Contribute to an HSA if eligible, you have until April 18, 2023

Click here for tons of resources on taxes.  Whether you prepare your taxes yourself or use a tax preparation service, getting organized and taking action to optimize your tax return can make tax time a happy time!

Vida Jatulis
Vida Jatulis

Vida joined our MainStreet Financial Planning team in 2022. She utilizes her life and work experiences to help clients develop an action plan for a vibrant and healthy financial life. Vida is a CERTIFIED FINANCIAL PLANNER™ professional with a Master of Science degree in Investments and over 15 years of experience as a Financial Planner, Wealth Advisor, Pension Consultant, Trust Officer, and Portfolio Manager. In addition, Vida has personal experience with struggling and succeeding to reach milestones such as purchasing a home, putting kids through private school, saving for college, achieving debt free status, saving for retirement, raising a family on a single income and much more.

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