File Your 2022 Taxes Early

At tax time, you should familiarize yourself with changes to the Internal Revenue Code and gather and organize the information required to file your return. Doing so can help you ensure compliance and reduce the time spent on the cumbersome, and often frustrating, process. It could also save you money, assuming the process enlightens you to a beneficial aspect of the tax code.

Whether you plan to file your own taxes or enlist the help of a tax professional, read on for some expert tips to streamline your experience.

This means familiarizing yourself with changes to the tax code since you filed your 2021 return and understanding any new filing procedures implemented for the 2023 season. The best place to do so is to go right to the source — the IRS.

I recommend a brief review of the agency’s December news release: What’s new and what to consider when filing in 2023.

The release also offers guidance on avoiding tax return refund delays by leveraging the IRS’ electronic resources, which include a personalized online account and direct deposit functionality.

The information required to file a tax return is highly personal. Some people have simple documentation requirements that are easy to manage. Others have highly demanding situations that necessitate leveraging the expertise of a tax professional.

I designed my tips today for the average tax filer. Read on for a primer about gathering and organizing your information.

Gathering your personal information is the first and easiest thing to do.

In addition to the items above, you should have a copy of your 2021 federal tax return. It may not be necessary, but it can be a very useful reference.

Gather all your income substantiation documents. Depending on your labor arrangements and the diversity of your passive income streams, you may deal with one or many different documents.

Beyond the items above, pull records of other sources of income, such as gambling winnings, jury duty pay and cancellations of debt.

Another critical area of preparation relates to tax deductions, which are provisions you can claim to reduce your tax obligation. According to recent data compiled by the IRS, nearly 90% of personal income tax filers claim the standard deduction, which is a flat, prespecified amount based on your filing status.

The remaining 10% itemize their deductions via IRS Schedule A. If you are among this group, you need to maintain adequate documentation substantiating expenditures.

Tax credits are another area that warrants documentation preparation. Tax credits offer direct reductions to your tax obligation, whereas tax deductions offer reductions to taxable income. As a result, credits are usually more economically beneficial than deductions.

A brief listing of the most widely claimed credits is provided below. Hold onto any documents received for these and other tax credits, and familiarize yourself with the IRS forms referenced.

Generally, estimated tax payments documentation only pertains to self-employed individuals and those that earn significant amounts of money from non-employment sources, such as investments in real estate and financial securities. If you made estimated payments during 2022, be sure to document the transactions and incorporate the payments into your annual tax filing.

For additional guidance, check out the IRS’ comprehensive get a jump on next year’s taxes resource. It provides in-depth coverage on what’s new this tax filing season, helpful information on organizing your records and links to online tools and resources.