How to Reduce Stress Filing Your Income Tax Return For 2023
The most crucial difference between savvy income taxpayers and the rest is they prepare to pay income tax the entire year, not a one-time event. By starting to prepare now, you can also chill out and take a relaxed stance to file your income tax return for 2023. A few handy tips to reduce the stress of filing income tax returns:
Tax filing becomes simpler automatically if you organize all your paperwork. The first thing to do is collect your previous year’s tax return and relevant documents and keep them safe in a place you can refer to whenever you like. You do not need a complex filing system; a big envelope or a shoebox will do well. Prepare a checklist on a computer spreadsheet to help you collect all the tax documents needed to complete your income tax return. Remember to keep all tax-related documents and mortgage interest statements that arrive by mail, usually in January. Some may not look important but be sure not to throw them away. You should collect all the receipts of all expenses; you have incurred during the year and know the prices you have paid for stocks and bonds you may have sold. Know if any of your investments are tax-free.
Withhold Tax Accurately
You must ensure you withhold the correct amount towards tax from your income. Withholding too little can mean paying a large sum to the IRS at the end of the year or getting a less-than-anticipated refund. If your tax amount was large or you received too large a refund in 2022, you may wish to consult an accountant or a professional income tax service provider to get the figure more accurate. Remember the law allows you to update your withholding amount anytime, not necessarily when you have a life-changing event.
Track Your Expenses
Since you can claim deductions for many business expenses, it is good to keep tracking them as and when you incur them to prevent things from piling up later. Keeping track of them can save a lot of time later and potentially get you a larger refund, as you will not miss out on any expenses. Using a simple spreadsheet on your computer and a shoebox to store your records can do the trick.
No one likes to pay more income tax than necessary. A professional tax preparation service can help you make the most of your deductions, credits and other benefits you are eligible for. They can also guide in filing complicated returns where businesses or investments complicate the process. Professional tax advisors can also help if you owe back taxes or have an IRS audit.
It is now possible to e-file your income tax return for 2023 with the help of a professional tax service provider. E-filing ensures that you get your refund quickly and it also prevents errors, late filing penalties and gives you the convenience of doing it from the comfort of your home or office.
With some simple preparation and planning, you can make the income tax return filing process less stressful for 2023. By getting organized, withholding taxes accurately, tracking your expenses and taking help from a professional tax advisor if necessary, you can take control of your finances and understand the implications of your taxes better. Make use of the electronic filing option to ensure your income tax return is filed on time and you get the refund owed to you as early as possible. Although filing taxes can be stressful, with some advanced preparation, you can make it a hassle-free process.
It is never too early to start planning to file your return for 2023. By filing early, you get more time to arrange the funds you may need to pay IRS or the state and get your refund faster. According to Forbes, e-filing gets you the refund most quickly. Ensure you file Form 4868 latest by April 18, 2023, to get an extension of the filing date until October 16, 2023. However, you must pay any estimated due tax when you submit the form. The IRS can impose a penalty for late filing of 5% per month on the pending tax amount. It will also charge 0.5% of the tax due per month as a late-payment penalty.
Frequently asked questions
How do I find out if my investments are tax-free?
You can check with your financial advisor or accountant to determine if your investments are tax-free. They will be able to provide you with the proper information.
When is the last day I can file my taxes for 2023?
The last day to file your taxes for the 2023 tax year is April 18, 2023. However, if you need an extension of time to file, you can submit Form 4868 by April 18th and get an extension until October 16, 2023.
How do I know if I am withholding the right amount?
You can use the IRS Withholding Calculator to check if you are withholding the right amount. It will help you estimate your taxes and compare it with the actual figure.
What should I do if I owe more tax than what was withheld?
If you owe more than what was withheld, you must pay the full amount before April 18, 2023. Otherwise, you may be subject to late payment penalties and fines. You can pay your taxes by check or credit card through the Electronic Federal Tax Payment System (EFTPS). Alternatively, you can contact a tax professional for more information on how to pay any outstanding taxes.
Taxes may not be the most exciting way to spend your time but preparing in advance and knowing what to expect can help make filing your taxes easier. By following these steps, you should have no problem filing your income tax return on time and getting the refund you deserve. Good luck!