In January, many taxpayers will swarm their tax preparers, organized files in hand. You know, those folks with insanely detailed Excel spreadsheets and neatly annotated records (likely color-coded) bundled and ready to be uploaded.
I am not one of those taxpayers. If you’re reading this, it’s likely the case that you’re not either. And that’s okay.
There’s no shame in not being organized in January. I get it. I work. I own a business. I have a family. And, gardening season is around the corner, so there are catalogs ready for perusal—a (tax)girl has to have priorities.
But there are steps that you can take to ready yourself for tax season that don’t require a personality overhaul. Here are ten easy things you can do to get ready for tax season now:
- Find a spot for your tax records. Yes, we all know that we were supposed to be doing this regularly throughout last year. But, unlike Cher, we can’t turn back time. You can only move forward. Most of your tax records—your Forms W-2 and 1099—will be mailed to you in January. Take steps now to get those organized. An easy way to do this is to find a spot in your house that you’ll designate as your tax records spot. I recommend a bin, basket, or other file near where you typically sort and open your mail—if you have to walk across the house, you’re just asking for trouble. Pop any forms you receive directly into your tax records spot—even if you can’t bring yourself to open them immediately. Don’t use that spot for any other mail, just tax stuff. When it’s time to sort through it, it’s all in one place. (For more organizational tips, check out this episode of the Taxgirl podcast.)
- Dig out last year’s tax return. If you use a tax preparer who sends you paper copies of your return, or if you physically print out a copy of your return, stash them in the same place every year (I leave mine in the fancy green folders that my tax preparer sends them in so that they’re easy to spot). Pull out last year’s return now and keep it with your tax records (see #1 above). In most cases, you’ll need your prior year’s return to file—even if you’re filing for an extension—so pulling it now means you won’t be scrambling later.
- Check your tax balance. Nobody likes surprises—a lot of the apprehension surrounding tax season is not knowing what might happen. You can’t see into the future, but if you can’t remember whether you’ve paid your balance or are still owed a refund from last year, you don’t have to wait until you file to find out. Check now by going to your online account at IRS.gov.
- Double-check your bank information. Every year, I receive a slew of taxpayer emails asking how to redirect payments scheduled to be deposited in old or closed accounts. Head this off early by double-checking your bank info on last year’s return (see again #2) and confirming that it’s still correct. For more on direct deposit, check out this previous Taxes from A to Z article. If you don’t have a bank account, visit the FDIC website for information on where to find a bank that can open an account online and how to choose the right arrangement.
- Confirm your name and address. Another issue that trips taxpayers up is not having the correct name and address in the IRS system. If you’ve gotten married or divorced or taken other steps to legally change your name, you’ll want to make sure that you’ve let the right folks know. For most taxpayers, that starts with notifying the Social Security Administration (For more about a name change, check out this previous article). And if you’ve moved, be sure to let the IRS know—you can do that by using a new address when you file your tax return. You can also file Form 8822, Change of Address. Finally, remember to change your address with the US Postal Service to make sure your mail gets to you in the meantime.
- Create a mental timeline. I appreciate that you don’t have a crystal ball, but you have a rough idea of what your spring might look like. Are you planning any trips for work or home? Is it hockey season—meaning that your weekends will be packed with chauffeuring kids to practice? What does work look like—is spring your busy season? Tax Day is April 18 this year—that’s just four months out. Think about your timing and when you hope to file. If you have holes or preferred dates in mind, or if you’re planning your finances around a bill or refund, coordinate the planning now. Don’t wait until April.
- Talk to your not-so-minor children. I get a lot of emails from older children who might be in college or working and don’t know how to file. Are they even still dependents? Be sure to have this conversation with your children sooner rather than later—it may be the case that they’ve already filed a return, complicating your subsequent tax return. Talk about this now—I suggest luring the kids home with promises of a home-cooked meal and clean laundry (that works in my house).
- Take a peek at your retirement accounts. Most taxpayers can contribute to traditional or Roth individual retirement accounts (IRAs) through the tax deadline—and contributions to those traditional IRAs may be tax deductible. There are contributions rules and limits, which means that for 2022, your total contribution amount can’t exceed $6,000 ($7,000 if you’re age 50 or older) or your taxable compensation for the year, whichever is less. Check now to see how much you’ve already contributed and whether you have any wiggle to contribute more. Remember that you don’t have to make a lump sum payment—it’s okay to sock money away in smaller amounts. There are 13 weeks until April 18—at $50 per week, that’s $650, and at $200 per week, that’s $2,600. Consider scheduling an automatic transfer so that you don’t forget—just remember to designate those payments as 2022 contributions, so you don’t confuse your plan administrator.
- Touch base with your tax professional. Even if you know when you want to file (see again #6), your preparer might have different ideas. Have a conversation early and find out when your tax preparer has availability (they, too, have a timeline), exactly what documentation they want, and how they want you to send it. If, for example, they want scans, not paper, you’ll want to factor that into your timeline. One of the biggest gripes taxpayers have about their preparers—and vice versa—is a lack of communication which typically leads to unrealistic expectations. Have the discussion early, even if you don’t intend to file until later in the year.
- Make peace with filing an extension. Say it with me now: There’s no shame in filing for an extension. It’s always better to file a complete and accurate return on extension than a flawed and rushed return in April. Once you’ve run through this to-do list, consider whether an April filing date is manageable. If it’s not, make your peace with filing for an extension now so that it’s not a source of stress—for you or your preparer—later.