April 18th is drawing closer and closer. Are you prepared? The best way to prepare for tax season is to put in the work now to make sure you have everything you need. The more prepared you are, the easier it will be when the deadline rolls around. Here are six tips to set you up for success to pay your taxes in 2023.
Gather Your Documents
Make sure you have all the paperwork on hand that you’ll need to get your taxes done. Review this Tax Day checklist so you don’t forget anything:
- Last year’s federal and state returns
- Social Security numbers for your family (including spouse and any dependents)
- Income documents (a W-2 for your employer, or 1099 forms if you’re a contract worker)
- Documents for deductions (charitable deductions, medical deductions, business deductions, and deductions for retirement accounts)
- Documents for credits
- Any federal estimated tax payments you made during the year
Consider making a list that includes all the accounts you’re expecting information from. If you receive the information digitally, immediately print and file the paperwork so it doesn’t get lost in your inbox.
Choose A Professional
You can file your taxes yourself using software like TurboTax, Tax Slayer, or H&R Block. Or work with a professional, such as a CPA (certified public accountant) or tax attorney.
If you’re having trouble deciding which route is best, think about how complicated your taxes are likely to be this year. Did you move states? Do you have money invested stocks? It may be best to have an accountant look everything over. A tax professional can also help make sure you catch every deduction possible.
File Electronically
The IRS is encouraging people to file your taxes electronically using direct deposit information as soon as you have everything you need to file an accurate return. You can use a bank account, prepaid debit card, or mobile app for direct deposit.
Filing electronically is the easiest way to file your taxes. You will also get any refunds more quickly.
Consider an Extension
If you are currently dealing with long-term health issues or other situations that are impacting your ability to keep up with taxes, consider filing an extension. The deadline for an extension in 2023 is Monday, October 16th, giving you an additional six months to get everything together.
The IRS states that to get the extension, you must estimate your tax liability and should also pay any amount due.
Maximize Your Deductions
Make sure you’re deducting everything you can from your taxes. Some deductions to consider include:
- The larger standard deduction available for people 65+
- Business expenses, if you make money by selling products or services
- Social Security tax exemption
- Premiums for Medicare Part B, Part D, Medigap, and Medicare Advantage
- Charitable donations
- Retirement plan contributions
Think about which deductions you qualify for and which ones would make the most sense.
Look Ahead
As we look ahead to the 2023 tax year, there’s good news: The IRS adjusted its income tax brackets, meaning you might owe less in taxes next year.
For the 2022 tax year, you would be taxed 10% of your income up to a maximum of $10,275. After that, you’d rise to the next bracket.
For 2023, however, the income “floors” for tax brackets have increased. If your total income stays the same between 2022 and 2023, you’ll owe less money in taxes.
Thanks to this change, you could potentially save next year on your taxes.
Get Help with Your Finances
Our final tip? Connect with a professional who can help you with any loose ends in your financial portfolio — like a Bankers Life financial representative. Find someone near you today!
This material provides general information about the described insurance product(s) for educational purposes only. This is not intended as investment advice or to recommend the insurance product(s).
Bankers Life Securities, Inc., Bankers Life Advisory Services, Inc. and their representatives do not provide legal or tax advice. Each individual should seek specific advice from their own tax or legal advisors.
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