Getting a head start on your tax prep can make filing your return in the spring faster, easier, and a lot less stressful. Here are 5 things you can do right now to start preparing for the 2022 tax season.
The holiday season is officially upon us, and your thoughts are likely focused on shopping, decorating, and travel plans. But as soon as those holidays are over, tax season will be here, and it’s important that you not be caught unprepared. Getting a head start on your tax prep can make filing your return in the spring faster, easier, and a lot less stressful. So, here are 5 things you can do right now to start preparing for the 2022 tax season.
Review Your Tax Credits and Deductions
During the crunch of tax season, it’s difficult to go over your eligible tax credits and deductions in great deal—but that’s exactly what you should be doing to ensure you’re receiving every credit and deduction you qualify for. Even if you’re working with a CPA or tax preparer, getting ready for tax season earlier allows you to review any changes in your personal situation in greater detail, so we can let you know if there are other tax breaks that you could be receiving. The closer it is to the April tax deadline, the less time you’ll spend going over these details, and the more likely you are to miss out on major tax savings.
Contribute to Your Retirement Accounts
Retirement contributions are one major way that many people reduce their overall tax liability. Because contributions to most retirement accounts are deductible, this is a great way to find last-minute tax savings. However, you shouldn’t wait too long to make those contributions. For one thing, it can be difficult to scrape up the funds you need to contribute as much as you want to your accounts at the last minute.
For another, there’s obviously a deadline to make those contributions, if you hope to deduct them on your return. Deposits into 401k accounts must be made by the end of the calendar year. IRAs offer you a bit more time; you have until April 15, 2022, to make those deposits, and you can still deduct them on your 2021 tax return.
Start a Folder for Your Tax Documents
For tax filers, the most time-consuming and frustrating part of filing your return is often gathering all of the necessary supporting documents. While you won’t be receiving your 2021 tax forms until after the New Year, now is still a good time to set up a folder (either physical or digital) to start saving your tax documents. You can also start putting important supporting documents into that folder while waiting for your official IRS forms. These documents can include:
Put all of the receipts and other documents you already have into the folder, then continue to add the official forms as you begin receiving them. That way, you’ll know once you’ve received the last form and will already have all of your documents prepared for your CPA to file your return.
Review Your Withholdings
This time of year is always a good time to review the withholdings on your paycheck. As your life and the global economic situation changes, the appropriate amount to withhold from your paychecks can change as well. Updating those withholdings can help save you some serious headaches and unwelcome surprises on your next tax return. You can calculate your appropriate withholding amount with the IRS calculator, then update your paycheck withholdings by requesting a new W-4 from your company’s HR department.
Schedule a Meeting with Your CPA
The best time to schedule a tax planning meeting with your CPA isn’t after tax season is in full swing—it’s right now. For one thing, our schedules are typically much more open prior to tax season. This makes it easier to find an appointment that works with your schedule. And for another thing, meeting together now allows us some time to help you decide on any last-minute changes you can make to improve your tax situation.
If you haven’t begun preparing for the 2022 tax season yet, we strongly encourage you to start taking steps to do so now. If you’re still unsure what you should do to prepare, we invite you to reach out to the experts here at Peacock & French CPAs. We can help you to determine what steps you should take and what forms you’ll need to gather to make filing your return a much smoother process. Give us a call today to schedule a consultation.