Would it surprise you to hear that one out of every eight taxpayers filed an extension in 2024? The IRS reported that 19 million taxpayers asked for additional time to complete their tax returns.1
There’s a variety of reasons why people file for an extension, including some that are due to the IRS itself! For example, the IRS may not have an updated tax form ready by April 15, or it’s still clarifying a certain tax rule, which makes filing a challenge.2
One of the other leading factors is plain-, old-fashioned procrastination. Some people just delay and delay and avoid filing until it’s too late. But over the years, we’ve found just a few tips that can help people dot their “i’s” and cross their “t’s” and complete their taxes before April 15.
“Don’t allow Uncle Sam to be your biggest beneficiary by failing to properly plan,” said Mick Owens, who wrote the popular book Diamond of Life: The Five P’s of Success and Significance. Mick stresses the importance of properly planning in all aspects of your financial life, from creating estate strategies to tax preparation to retirement initiatives.
- Collect your income sources
It can be as simple as a large manila envelope or a shoe box. But create a space to collect all of your year-end tax forms as they arrive in the mail–this usually starts in late January. If you’re working, your W2 for employment earnings may be added to your company’s HR portal. However, you’ll need to download and print the item. Here are some other common forms to be on the lookout for:
- 1099-DIV for dividends
- 1099-INT for interest received
- 1099-NEC for non-employee compensation
- 1099-R for distributions from retirement plans
Tax collectors also came to be baptized and said to him, “Teacher, what shall we do?” And he said to them, “Collect no more than you are authorized to do.” Luke 3:12-13
- Put your income adjustments in the same envelope or shoe box
Equally as important as documenting your income is collecting the documents that show any adjustments to your income. Some adjustments may include:
- Mortgage interest payments
- Tithings paid to your church or other religious organization
- Property tax payments or other tax payments, such as car registrations
- Decide how you want to file this year
While about 50% of all taxpayers use a paid tax professional to file, a growing number of taxpayers are getting more comfortable with using tax software. As a general rule, if a filer only has a W2 form, worked only one job, and hasn’t experienced any major life milestones in the tax year, tax software may be an option to consider.3
If your return is more complicated, however, the knowledge and guidance that a CPA can provide may be beneficial. If you’re undecided about how to move forward, we can help assess your situation.
Pro tip: In the event that you need to communicate with the IRS, a CPA may be able to offer assistance or help you prepare the correspondence.3
Remember: We’re not tax experts, but the good news is that we are associated with companies that are, including cfd Tax Preparation & Bookkeeping Services, Inc. If you want to learn more about how to prepare for the tax filing season, please let me know. We want you to be in a great position to file your taxes this year, so we encourage you to speak with your tax professional or ask our tax planning department. They might be able to offer you more insights.
- IRS.gov, April 15, 2024
- WSJ.com, September 13, 2022
- USAToday.com, December 20, 2023
