A 2021 survey from IPX 1031 shows that nearly a third of Americans procrastinate doing their taxes.Many say filing is too time-consuming, while others say it’s too stressful.
Yet, with the proper tax planning, filing your taxes won’t require much time or be stressful. For business owners, these tips can also assist you in preparing for your accountant before you have to file your returns.
We’re here to help you with your tax planning strategy, giving you tips to implement as we get ready to close out 2022. Continue reading our top tax tips to help you prepare for the 2023 tax season.
1. Organize Your Records
For many, the most time-consuming part of filing taxes on time is getting all the documents together. The most important documents you need include the following:
- Previous year’s tax return
- This year’s W-2 and 1099s
- Mortgage interest statements
If you have investments, keep all the statements from your broker or other financial institution. To receive a tax credit or deduction, keep all related receipts.
Anytime something tax-related arrives in the mail (especially in January), don’t throw it away. Instead, create a space where you keep all your tax documents so that they are always together.
If you’re already overwhelmed, your local certified public accountant (CPA) can help you create a document checklist based on your circumstances.
Keeping all your records organized will also help your accountant when it is time to handle your business taxes. Be sure to reach out and get a list of the documents they need in advance, so you have plenty of time to get everything together.
2. Understand Tax Credits and Deductions
Both tax credits and deductions help reduce your tax bill. Credits directly reduce the amount you owe by granting a dollar-for-dollar reduction. Conversely, deductions lower how much of your income is subject to taxes at your highest income bracket level.
You’ll save money by leveraging the credits and deductions you qualify for during tax planning. While you may not receive a tax refund from the government, you can reduce your tax bill by hundreds or thousands.
A CPA is also valuable for helping you identify applicable credits and deductions, both for you as an individual and a business owner.
3. Explore Other Methods to Cut Your Tax Bill
Aside from credits and deductions, you can further reduce your tax bill (and stress level) by contributing to a retirement fund, like a 401(k) or IRA. Sometimes, the money you contribute to these accounts is tax-deferred. This means you won’t pay taxes on it now, thus lowering your taxable income.
Other times, you still need to pay taxes on the contribution, but you won’t need to pay taxes on it again during retirement. Your money can grow tax-free.
To learn more about making retirement contributions, seek out the accounting services offered by your CPA.
Hire a CPA for Tax Planning Assistance
These tax planning tips will help you feel less stressed during the 2023 tax season. But we know that even when you follow a tax planning checklist, you may still be worried about the process.
Hiring a CPA is the best way to file your taxes correctly and on time. Plus, you may even save some money. So contact us at Parker Business Consulting & Accounting, P.C. today to speak with one of our CPAs. With more than 75 years of combined experience, we’re some of the best in the Knoxville area.
Parker Business Consulting & Accounting, P.C. is a unique firm with more than a combined 75 years of experience in private industry, coupled with a strong background in public accounting. This combination enables us to provide valuable assistance based on direct experience with many of our clients’ same issues.