As the April 18 federal tax filing and payment deadline approaches, it may be helpful to review all the items you need to stay on top of before tax filing. Remember that if you file on extension, you have until October 16, 2023 to file your tax return.
Don’t Forget To…
- Watch for Scammers. Tax season can attract financial scammers looking to part you from your money, by collecting your personal details or taking your refund. Be wary of emails, phone calls, or text messages with links to click or requests for you to send money without verifying the source.
- Have all Needed Paperwork. Make sure you have all your important documents ready before you begin filing, so you can avoid mistakes and take advantage of every deduction you’re entitled to.
- Max Out Tax-Advantage Accounts. Be sure to make a contribution to an individual retirement account (IRA) or a health savings account (HSA) for the 2022 tax year by April 18, 2023. Thereafter, you can only take advantage of 2023 contributions.
- File a Gift Tax Return. Be sure to tell your tax preparer if you gifted more than $16,000 per beneficiary during the 2022 calendar year, so they can file a gift tax return on your behalf. There is no extension to take advantage of the annual exclusion.
- Adopt a Filing System. Consider keeping tax records for at least 6 years, which is how long the IRS generally has to audit returns and request supporting paperwork.
Making the Most of Your Refund
- Pay off High Interest Debt. If you are paying high interest debt, such as a credit card balance or consumer loan, now could be a good time to pay it off.
- Top off Emergency Funds. Consider using your refund to start, or shore up, an emergency fund, with the aim of having at least three to six months of living expenses set aside for a rainy day.
- Invest It. Contribute funds to retirement accounts, college savings plans, or taxable accounts in order to meet long-term investment goals. Even small contributions help.
- Reevaluate Withholdings. You may want to consider having less income tax withheld from your paychecks. While you won’t have a big refund (or at all) next year, you will free up cash flow to invest and boost your nest egg.
When it comes to taxes, preparing in advance can help you save time and money. Get a jump start on moves you can make today and throughout the year to make tax season as painless as possible.
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Disclaimer: Information provided is for educational purposes only. HBWM does not provide tax, legal, compliance, or accounting advice. In considering this material, you should discuss your individual circumstances with professionals in those areas before making any decisions. Further, HBWM makes no warranties with regard to such information, or a result obtained by its use, and disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information.