Here are the TOP 5 steps you can take to game plan for tax season in 2023
1. Gather All Documentation
Gather all necessary documents: Assemble all relevant documents, such as W-2,1099 forms, and any other income documents in addition to receipts, invoices, or bank statements for your deductible expenses.
2. Check Your Spending Power
Check your withholding: Make sure that the correct amount of tax is being withheld from your paychecks throughout the year. You can use the IRS's Withholding Calculator to determine if you need to adjust your withholding. Don’t wait until tax season to adjust your withholding amounts.
3. Know Your Filing Status
Consider your filing status: Determine your filing status, as this can affect the amount of tax you owe or the size of your refund. Your filing status is based on your marital status, dependents, and other factors. Married individuals only have 2 possible filing statuses: married filing jointly or married filing separately. And only individuals with dependents can file as head of household.
4. Tax Credits & Deductions
Take advantage of tax credits and deductions: There are many tax credits and deductions available that can reduce your tax liability. Make sure to obtain a better understanding of any credits or deductions that you may be eligible for. Tax planning is offered year round for this very reason.
5. Beat The Tax Deadline
File on time: Make sure to file your tax return by the deadline, which is typically April 15th. If you need more time to complete your tax return, you can request an extension. However, keep in mind that an extension to file is not an extension to pay any taxes owed. Corporation owners, your corporate returns are due March 15th.
Honorable mention for business owners, don’t always focus on how to spend more money to reduce tax liability. You may want to consider what you can invest in to reduce tax liability.
