Tax Season 2023: 10 Points to Know Before You Start Filing Tax Return

Tax season 2023 started on January 23rd, 2023. So, it is time to start preparing for the federal tax return for the tax year 2022, for which the due date is 18th April 2023. Some people need to file the tax return compulsorily. We earlier posted that filing of tax returns for even deceased taxpayers. In fact, there are four scenarios in which you must file a tax return even if you have no taxable income. The following 10 points are just a reminder for readers.

Tax Season 2023: Video

1. Understand your filing status

Your filing status determines the tax rate and deductions you are eligible for. For example, if you are married, you have the option to file jointly or separately. Filing joint returns make you eligible for higher deductions and exemption limits. In fact, the filing status also determines your filing requirements.IRS has created an online tool for determining your filing status.

2. Gather all necessary documents

To file your tax return accurately, you will need to have all of the necessary documents, such as W-2s, 1099s, and other forms that report your income and deductions. A summary list is provided below :

1. Social Security number:
2. Bank account and routing numbers.
3. Forms W-2 from employer(s).
4. Forms 1099 from banks and issuing agencies and related to receipt of unemployment compensation, dividends, and distributions from a pension, annuity, or retirement plan.
5. Form 1099-K, 1099-MISC
6. Form 1099-INT for interest received.
7. Other income documents and records of virtual currency transactions.
8. Form 1095-A, Health Insurance Marketplace Statement.

3. Determine your deductions and credits

Tax deductions and credits can help lower your tax bill. Be sure to take advantage of all deductions and credits that you qualify for. There are many refundable tax credits and other types of tax credits.

4. Keep accurate records

Accurate records are essential when it comes to tax filing. Keep records of all income, expenses, and deductions in case of a tax audit. It must also be noted that IRS can initiate action to assess tax for three years and in case of fraudulent tax returns or not fileed the tax return.

5. Understand the difference between tax deductions and tax credits

Tax deductions reduce the amount of income you are taxed, while tax credits reduce the amount of tax you owe. For example, standard deductions or itemized deductions lower your taxable income, but credits like child tax credits reduce your tax liability.

6. Be aware of tax deadlines

The deadline for filing your tax return is April 18th, 2023, for the tax year 2022, but it may be different in case you are self-employed, or you want an extension. You must pay the estimated tax and file form 4868 for an extension of the filing deadline to 15th October 2023.

7. Consider e-filing

E-filing your tax return is an easy and efficient way to file your taxes. You can use IRS free file program to file tax returns using many participating online software companies. Filing tax returns digitally can also speed up the refund process. You can use our refund date estimator tool.

8. Understand the implications of not filing

Failure to file your tax return can result in penalties and interest charges if you have tax due on the date of filing taxes. Also, note that you can get an automatic six months extension for filing a tax return

9. Understand the implications of not paying

Failure to pay your taxes can result in penalties and interest charges and, in severe cases, can even lead to legal action. However, IRS has many programs for taxpayers to mitigate financial hardships. You can apply to offer-in-compromise or installment programs.

10. Seek professional help

If you have any questions or concerns about filing your tax return, it may be helpful to seek the advice of a tax professional. They can guide you through the process and ensure your tax return is filed correctly. Have you checked our tax return preparer near me tool?