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Start now. Assemble all the documents you’ll need, such as Social Security numbers, tax ID numbers, birthdates for your spouse and your dependents, along with your earning statements. At the beginning of the year, be on the lookout for your 2022 W-2 form from your employer. Even a small amount of bank interest can generate a 1099-INT, and if you had stock transactions or received dividends in a taxable account, you could receive a 1099-B and/or 1099-DIV. If you took a distribution from a tax-advantaged account, look for a 1099-R or 1099-SSA. Be sure to wait until you’ve received all documents related to your income before you submit your return.
Consider your other possible tax deductions. If you itemize your deductions, you may be able to deduct mortgage interest, state and local taxes, and charitable donations. If you take the standard deduction, you may still be able to deduct student loan interest. Your Financial Wellness coach can help you make sense of all this!
“I’ll deal with this later” may be a good philosophy for some things, but when it comes to filing your taxes, it can actually lead to even more stress. So be sure to start early. That way, if you can’t find a document, or need to consult an expert, you’ve got extra time to get it done.
Using a tax prep program can also help you avoid some stress this year. They typically walk you through each step by step, letting you know what’s needed and helping to translate the different “lines” on your tax documents. If you have received large tax refunds in the past, you may want to reconsider how much you are having taken out for taxes. Having more cash month-to-month may help you reach your financial goals sooner. Also, consider working with a tax professional, especially if your taxes are complicated. The cost may be offset by deductions you can take that you wouldn’t have discovered on your own, and it will help reduce tax season stress.
Updated for tax year 2022