Before Completing Your 2023 Tax Return, Take These 5 Steps

Another year, and another tax season is upon us. Whether you meet with a tax professional or prepare your taxes yourself, proper tax planning helps the processes go more smoothly and may reduce the risk of costly errors. Check out the tips below and prepare to tackle this tax season with confidence.

Step #1: Gather All of Your Forms

Beginning in January, you’ve likely started to receive the forms you need to properly complete your tax return. If you are expecting a large refund, you will want to make a list so you don’t forget anything that could affect it. Once you receive your documents, first give them a scan to make sure they are correct and contact the sender if there are any discrepancies. Remember, even a simple misspelling can cause a flag on your tax return. Inspect all of your documents carefully.

Some of the forms you will need to look out for include the following:

• W-2s from your job
• SSA-1099 for Social Security benefits
• 1099s for additional income, interest, gains and losses
• 1095-A for government marketplace health coverage
• 1098s for reporting interest and tuition payments
• Schedule K-1s for company ownership

Step #2: Round Up Your Receipts

If you have your own business or plan to itemize your deductions, you will need to record expenses so that you can take advantage of any available write-offs. Gather all the receipts for business expenses, medical expenses, and other expenses that can be listed on your Schedule A or Schedule C. Receipts can be physical receipts or bank and credit card statements that show payments for these items. Once you’ve gathered them, organize them by type so that they are easy to find when you begin filing.

Step #3: Compile Records of All Charitable Contributions

Throughout the year, you may have made donations to tax-exempt organizations. These donations can provide you with charitable contribution write-offs, which typically require itemized deductions and documentation. Most organizations, from churches to fundraisers, can provide a record of your tax-deductible contributions. Further, if you or your spouse are over age 70, you might be eligible to classify them as Qualified Charitable Contributions(QCDs), which can exclude them from your taxable income and provide you with tax savings¹. This can especially helpful if you itemize your deductions. Contact your tax advisor for more specific guidance on your situation.

Step #4: Create a List of All Personal Information

While you likely know your Social Security number by heart, you will want to jot down the Social Security numbers of any dependents you wish to claim. This way, they are easy to access, and you can be sure they’re accurate. Also, make a list of addresses for any properties you own, as well as the dates on which they were bought or sold.

Step #5: Get a Copy of Last Year’s Tax Return

If you are using the same preparer as the previous year, they should have a copy of your tax return. If not, find your old copy and have it ready with your other tax items. Being able to reference your previous return can help you see what you filed last year, so you don’t overlook something this year.

Don’t let tax preparation leave you feeling overwhelmed. Enjoy less stress and a smoother process by preparing everything you need for filing this tax season.

Spiritual Application

Many of us understand the value of proper order. However, is there perhaps more to it than just being better organized? It's been said that an ounce of prevention is worth a pound of cure. This is certainly the case when it comes to taxes and reconciling the accounting of our financial lives. However, is there perhaps even more to it than that? Proverbs 10:4(NKJV) says, "He who has a slack hand becomes poor, but the hand of the diligent makes rich." Reading more closely, it actually says that our hand can actually make us rich! This denotes an action that we are taking that is improving our situation. This is a stark difference than simply staying with the curve, we are actually moving ahead of the curve! 

Sometimes it's easy to look at everything that needs in accomplished in our lives(taxes being one of them!) and get overwhelmed. However, by taking simple steps and moving in the right direction, we can accomplish more than we think. What step(s) are you going to take today? 

Evergreen Financial Group is a Fee-Only Financial Planning and Investment Firm located in Billings, MT serving clients in Montana, Wyoming and virtually across the country. Evergreen Financial Group specializes in working with Christian families, including Young Professionals, Current and Future Retirees and Church Staff Members.