Plan for Your Next Tax Return

Fail to Plan Is Plan To Fail!

At the end of the year, begin planning for the next tax return to get a head start on your taxes. Once the new year begins, it is time to begin getting all your documents in order for Tax Year 2022. e-File your 2022 Returns in 2023 so you do not have to worry about manually filling in complicated IRS and state tax forms; e-file by April 18, 2023.

Why to Plan Early

Tax planning is the process of acquiring the latest tax knowledge and taking the necessary steps to reduce your income tax burden. You pay taxes with your hard-earned money, you should be in control of how much money you take home with each paycheck. Taxes can be complicated and stressful and you could waste your money if you don't plan properly. Take control of your taxes: work with the right people and reliable websites with simple and free tax tools to understand your finances. Use these easy-to-follow tips to help minimize stress about your taxes: stupid and smart things taxpayers do when filing taxes.

Related: How easy is it to file taxes by yourself?

If you want to either reduce your taxes or increase your refund for your next return, then tax planning throughout the year is critical. In addition, when planning for life changing events (marriage, home purchase, career change, etc.) you should also consider the possible tax implications. The same is true for unplanned life changing events; they might have unplanned tax consequences.

For example, certain contributions (e.g. medical plan contributions, etc.) have to be completed by the end of the calendar year. In the case or a marriage or divorce, December 31st is the key date when it comes to selecting your filing status. The source or type of income you receive throughout a tax year will also help determine your taxable income.

Generally, most qualifying tax deductions and tax credits for a given tax year have to be expensed by December 31st of the applicable tax year. An exception is retirement plan contributions; an IRA contribution can generally be made all the way up until the April 15, 2022 filing and payment deadline.

Here at eFile.com, we help you with tax planning by not only providing free tools and tax calculators to help you, but we also ask you relevant questions that could lead to a reduction in your income taxes. December 31st is a critical deadline for each tax year. When you sign up for a free eFile account, you can also work with a Taxpert^® who can provide personalized support to your tax questions.

Tax Planning Guideline

1. Year-Round Tax Planning: January 1 - December 31

• Adjust your paycheck withholding with a Form W-4 so you get your next tax refund with each paycheck. Do you want your tax refund in your paycheck? Recent IRS statistics show that almost 130 million of all Americans get a tax refund check and the average refund check is $2,800. Why not get some of this refund now as part of your regular paycheck? Every month, most taxpayers pay an average of $200 too much in income taxes - adjust your W-4 now.
• See various tax loopholes and tax saving tips for honest taxpayers.
• If your income has not changed from last year, use our 2022 Tax Return Calculator to see how your 2022 Return may look. Alternatively, you can use the year-to-date income from your latest pay stub to estimate your expected annual income for the year. Keep in mind that our calculator is based on currently available IRS data which may be subject to adjustment.
• Access your eFile account and download a copy of your previous year tax return. In addition, collect all previous year's tax records:
  • W-2 forms
  • Pay stubs for the year
  • Home mortgage payment stubs and/or home purchase closing statement
  • Last year's tax return (for quick reference and comparison)
  • Receipts from anything you might claim as an itemized deduction
  • Receipts from any charity (cash donations, clothing donations, church tithes, disaster relief donations, etc.)
  • Car or vehicle mileage log (in case you intend to claim it as a business expense)
  • Any receipts for business travel expenses
  • Canceled checks (especially for IRA contributions and other deductions)
  • Credit card statements and bank statements (these can be used to verify any deductions)
  • Medical bills you can deduct (especially if they exceed 7.5% of your income)
  • 1099-G form (for deducting state or local income taxes or for unemployment compensation)
  • 1099 forms (from any dividends, self-employment, or other income paid to you)
  • Mobile phone bills (especially if you made charitable donations by text message).

The IRS recommends that you keep all tax-related records for 3 years in case of an audit. However, old tax documents (such as last year's W-2's) can come in handy when you are filling out your current year's tax return. An example of some of the tax records you should store from previous years (and reference for next year's income tax return) is listed below. If you e-file your taxes via eFile.com, part of our customer service is to provide you a PDF copy of your IRS and state tax returns for the past 7 years.

2023 Tax Planning

This is not an exhaustive list and you my have additional forms or receipts that are not listed below. To make your mountain of documents easier to store, try scanning them and keeping them as PDF files; you can print them out if you need them. If you do this, remember to back up your computer files!

• As for current tax year planning, you can start by collecting W-2's, 1099 forms, medical expense receipts, charity donations, retirement contributions, child care expenses, alimony payments, canceled checks, and your previous year returns. This will help ensure you are ready to file next year's tax return or prepare for a possible tax audit.
  • Keep records for at least 3 years in case of an IRS tax audit. For your own peace of mind, you might want to keep them longer. Start a file folder at the beginning of each year and put all of your receipts into it.
  • Check your pay stubs against your W-2 to make sure they add up. Even employers can make mistakes!
  • Study last year's tax return. Are there any credits and deductions which you are still qualified to take? Are there any you did not take, but you qualify for now?
  • Donate to charity! The IRS generally only requires receipts for charitable contributions of $250 or more, but it's a good idea to keep receipts for any donation.
  • If you have planned your taxes successfully enough to receive a small tax refund, you should invest it in an educational savings account, an IRA, or a savings account at your bank. Use the money to start preparing for next year's taxes.
  • You can take either the standard tax deduction or you can itemize deductions. To get an idea of which is more beneficial for you, see our tax calculator and itemize your deductions, then see whether the resulting amount is higher than the standard deduction available to you. Always choose the higher amount! When you prepare your return with us, our software automatically uses the best deduction method for your tax situation.
  • Review existing retirement plans or contributions or start a new one.
  • Look at these tax saving options or honest taxpayer loopholes.

2. From April 15 - October 15

• If you e-filed a federal tax return extension, make sure you have all the tax documents needed to complete and file your 2022 Return by October 15, 2023. See how to file a free tax extension on eFile.com.
• Update your 2023 W-4 paycheck withholding now and get your tax refund earlier by claiming more money with each paycheck.
• Plan or pay your estimated tax payments for Tax Year 2023 - make these payments online so you do not have to mail anything. See how to pay taxes online.
• Make sure you keep copies of past tax returns and know where they are for at least three years in case you receive an IRS notice.
• Summertime tax tips: How do summer and taxes go together? You may take on a new summer job and you can take advantage of deductions that relate to all your summer activities, such as camp expenses for dependent children. These summer tax tips will help you save money when you file your tax return later.

3. From October 16 - December 31

• Year-end tax deduction tips: Embrace tax deduction planning at the end of the year. This will help you plan your deductions and credits as well as estimate your tax refund and/or tax payments by December 31.
• Make sure you take any qualified tax breaks by December 31 to save money on your taxes. Before you file your 2022 Tax Return, make sure you're aware of all the 2022 tax credits and tax deductions you can claim before New Year's Eve!
• Tax preparation and planning checklist: Need help keeping track of all these tax documents? Print out our tax return checklist and see how easy it is to check off all the W-2's, 1099s, and other items you need to file your return.

4. Tax Time Planning: January 1 - April 15 of the New Year

In most years, April 15th is the general tax return filing/tax payment deadline. If you miss the April 15th (for 2023 it is April 18) deadline, you can still e-file your return until the October deadline. During this time, the IRS requires federal income tax returns to be filed for the current tax year. Most states also require state income tax returns to be submitted during the same time period. e-File your federal and state returns together on eFile.com so you do not have to mail anything!

During tax time, follow the steps for proactive tax planning as listed under points 1 - 3 above. As a reminder:

• Make sure you have received all W-2 forms, 1099 forms, and other tax documents before you start preparing or e-filing your IRS and/or state tax return.
• Use this free eFile.com Tax Calculator and estimate your taxes before you actually e-file.
• Use any of the many free and easy-to-use tax tools on eFile.com:
  • Do you have to file a return or should you not file a return?
  • Who is a qualifying dependent?
  • Do you qualify for the Earned Income Tax Credit?
  • If you e-filed today, when could you expect your tax refund?
  • Why you should or why you should not e-file a tax extension.
• If you have questions about your estimated 2022 Tax Return results, you can contact an eFile.com Taxpert^®. We are here to help!
• Don't forget that electronically filing your taxes is easier, more accurate, and faster than paper filing.
• Print out the eFile.com tax preparation and planning checklist to make sure you have everything you need to prepare and file your tax return faster and easier.

Plan Now. Avoid Surprises Later.

Start the free 2022 Tax Calculator

Utilize many handy and simple tax tools.

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