It’s July. We’re a long way from Tax Day 2023.
But if you’re smart, you can take advantage of this time to help ensure the best outcomes for you or your business when you file your 2022 taxes.
No one likes to feel stressed out and be scrambling to pull everything together before the filing deadline. And certainly no one likes writing a bigger-than-expected check to Uncle Sam.
A little planning and organization can go a long way toward helping you feel better on tax day. Here are five things you can do now that will have you filing your taxes with a lot less stress next year.
Double-Check Your Withholdings
If you found yourself owing money on your taxes this year, one of the first things you should look at is your withholdings. Are you claiming the correct number of dependents? By withholding taxes from your paycheck, it’s a pay-as-you-go approach. Getting your withholdings in order will keep you from having to pay a lump sum at tax time.
Stay Up to Date on Estimated Payments
Anyone who does not have taxes withheld from their paycheck should be paying quarterly estimated taxes. This is important for anyone who is self-employed — freelancers, small business owners, independent contractors, etc. Staying on top of your quarterly tax payments will keep you from owing more money when you file. It can also keep you from having to pay penalties.
Document Your Itemized Deductions
Understanding itemized deductions is the first step to ensuring you maximize the savings oppportunity. Typically, you can deduct things like medical expenses, certain tax payments, mortgage points and charitable contributions, as well as the use of your home, car, phone, internet and more for business purposes. Start putting together a list and keeping a tally throughout the year.
Contribute to Your Retirement Plans
For most qualifying retirement plans, the money you put into them is not taxed. On the other hand, it’s also not easily accessible. You’ll want to ensure that you have ample savings available for emergencies. Beyond that, it’s smart to invest as much as you can into retirement plans like a 401(k), Simplified Employee Pension (SEP), and Simple IRA. You won’t’ have to pay taxes on it, and the money will be there when you’re ready for it.
Keep Track of Your Business Meals
For 2022, certain business meals are 100% tax deductible. So if you’re treating your employees, your clients or business associates to a meal as a way to strengthen the business relationship or simply talk shop over a bite to eat, this is a deductible expense. We encourage you to keep track of money spent on all of these meals, so we can document them on your tax filing and help save you money.
These are just some of the ways that you can start planning now for the best outcome when you file your taxes next year. If you have questions about any of these strategies — or any others — we encourage you to reach out to our team. We’re always ready to help.