Tax season starts Monday: 8 things to do before you file

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Come Monday, the IRS will begin accepting and processing 2023 federal income tax returns.

Filing your taxes is a task you may not like, but it’s one you can’t ignore — at least not without a potentially hefty penalty.

Here are eight things that can make your tax preparation and filing experience as easy, efficient, and inexpensive as possible.

1. Know your deadlines: except you File for automatic extension for six monthsThe application deadline for most people is April 15. Even if you get an extension, April 15 is the day you must pay any remaining taxes you owe for 2023, even if you didn’t file them by that date. Otherwise, you may face a late payment penalty – with interest.

However, tax filers in Maine and Massachusetts have until April 17 to file and pay their tax returns, because those states celebrate Patriots Day and Emancipation Day.

If you live or do business in a federally declared disaster area, the IRS may have extended the filing and payment deadline. Here is the list Places where tax exemption is available.

2. Withdraw your return from last year: Your 2022 tax return will give you a good starting point to figure out what documents you need to fill out this year’s return, said Tom Osapin, director of tax content and government relations at the National Association of Tax Professionals.

This is especially the case if you, like many people, have told all of your financial records custodians (e.g., employers, banks, brokerage firms, insurance companies, etc.) not to send you paper documents.

You need to go back to all of these online sources to see what 2023 tax forms they have created for you and submitted to the IRS. Ditto if you collected unemployment last year or had any other one-time payments that would likely be taxable.

“We say we don’t want paper documents. But that doesn’t mean the document doesn’t exist,” Osabin said.

3. Evaluate the major changes, if any, that have occurred in your life in 2023: If you got married or divorced, had a child, became widowed, sold a home or other major investment, started receiving Social Security, moved to a new state, or underwent any other major life transition in the past year, this could… To change your tax liability (or refund) from what it was on your return in 2022.

If nothing much changes for you, but you find that you have a very large difference in your tax liability or refund when you fill out your return, check your calculations.

“Tax laws are not significantly different this year than last year. [So] “It could be a simple data entry error,” Osapin said.

4. Do you have a small business or side gig? Check if you got a 1099-K from the payment app: If you’ve gotten paid through third-party payment apps like Venmo for side gigs or a small business, check your online account to see if the company issued you a 1099-K number.

The IRS has done it again Implementation delay A rule requiring third-party payment providers not to provide 1099-Ks for business transactions that total more than $600 per year. However, some states already require the forms to be issued when transactions exceed that limit, Osapin said.

If you get 1099-kMake sure all reported transactions reflect real business transactions and not personal things like your friends paying you for their share of dinner. If the form includes some personal transactions, include all the information from the 1099-K on your return, but exclude those personal transactions and include a note alerting the IRS that the amount you deducted is not business income, Osabin advised.

5. Fill out this form if you qualify for premium tax credits for your health insurance: If you receive advanced premium tax credits to help pay for health insurance you purchased on the public exchange, you must fill out the form, he noted. Form 8962. The information you will need to include will come from it Form 1095-A Which should have been issued to you. The same is true if you thought you were eligible for premium tax credits but didn’t get them, according to the IRS.

6. Watch Congress for potential increases in tax breaks: Lawmakers are still discussing details of the bipartisan tax package that contains two provisions that could save money for some filers claiming the child and small business tax credit.

If the package becomes law, the child tax credit could be expanded to temporarily enable low-income families to claim more of the credit on their 2023 tax returns. (More on that here.)

The same tax package would also increase the amount small business owners can write off from purchasing new equipment. Currently, you are allowed to deduct 80% of the cost for the year you purchased it. If the current tax bill becomes law, this amount will rise to 100%.

If you think these provisions affect you, you may want to wait a bit before filing your return to see how things go, Osapin said.

7. Speed ​​up your refund process: If you’re due a refund (like most tax filers), the IRS will usually issue one within 21 days of accepting your return. But note that if you are claiming the Earned Income Tax Credit, the IRS cannot by law issue an EITC-related refund before mid-February and estimates that these refunds will be available to filers starting February 27. But, Osapin said, there’s a chance the IRS will send you the non-EITC portion of your refund sooner than that.

In any case, the best way to ensure your refund as quickly as possible is to fill out your return accurately and completely, submit it electronically, and select “Direct Deposit” when asked how you would like to receive payment. So, before you send it, double-check your accounts, and make sure your name, address, and Social Security number are correct. It also means reporting all of your taxable income for the year – including money from gainful employment, dividends and interest, rental income and any business income you received through payment apps as well as other means, including cash.

Here is a list of The most common and most costly errors in tax returns The IRS has seen it over the years.

To find out how quickly you are likely to get your refund once you file your return, you can use the agency Where is my refund? a tool.

8. You may be able to file for free: It’s been the case for a while that if your income is low enough (this year, $79,000 or less) and if you have a simple enough return, you can prepare and e-file your federal tax return for free with select tax software providers.

But this year, the IRS launched a pilot program called Direct File that lets you do it all directly without an intermediary. The pilot program is being launched on a limited basis at the moment. The program will only operate in 12 states this year: Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington and Wyoming. Initially, it will only be available to federal and state government employees in those states. In a month or two, it may also be open to some private sector workers.

There are no income restrictions on who can use the software, but Live File cannot be used by filers who itemize their deductions. It will not be open to those with very different types of income outside of W-2 earnings from employers, Social Security benefits, interest income, and unemployment compensation. Finally, the software cannot be used to file your state returns, so you will have to do that separately but your state may have its own free filing software. (More details about the Federal Direct File Program are available here.)

CNN’s Katie Lobosco and Tami Lohby contributed to this report.

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