It’s no secret that paying taxes is not a favorite task for many Americans, but as Benjamin Franklin famously said over two centuries ago, “Nothing is certain except death and taxes.” This adage remains true today, emphasizing the inevitability of taxes. With the approaching federal tax filing and payment deadline on April 15, it’s prudent to review Federal Income Tax Tables and consider essential tax season tips from wealth advisors.

Key Tax Season Tips:

1. Get Your Paperwork Organized: Tax time often involves a substantial amount of paperwork. Ensure you have all necessary documents, such as Forms W-2, Forms 1099, records of charitable contributions, previous-year tax returns, mortgage interest records, and information on childcare expenses or medical costs. Collaborate with a tax professional to identify specific documents needed for accurate filing.

2. Max Out Tax-Advantaged Accounts: Although the 2023 tax year concluded on December 31, 2023, there’s still an opportunity to maximize contributions to individual retirement accounts (IRAs) and health savings accounts (HSAs) before the April 15, 2024 deadline. Contributions to employer-sponsored 401(k) plans for the 2023 tax year are also open. Taking advantage of these opportunities can reduce taxable income.

3. Consider Getting Help From a Tax Professional: While many individuals opt for self-prepared tax returns, those with increasingly complex financial situations may benefit from professional assistance. Tax professionals can help gather the right financial data, identify eligible deductions or credits, prepare income tax returns, and provide tailored advice. This becomes especially crucial as financial situations grow more intricate.

4. Plan for Future Tax Seasons: Incorporating tax-efficient strategies into long-term financial plans is a wise move. Strategies such as tax-loss harvesting, tax-aware asset location, and investing in tax-favorable options can contribute to long-term wealth growth.

5. If You Owe Money, Consider How You’ll Pay: For those owing money to the IRS, having a plan in place is essential. Options include writing a check, selling securities in the portfolio, using credit cards, taking out a loan, or paying in installments. Each option has its pros and cons, and careful consideration is needed to choose the most suitable method.

6. Think About How You’ll Spend a Refund: For the majority expecting a tax refund, thoughtful planning on how to use it can enhance long-term financial well-being. Options include reducing debt, preparing for unexpected expenses by building an emergency fund, or contributing to retirement accounts like an IRA. Strategically using a refund can contribute to financial stability and future goals.

The IRS encourages taxpayers to take steps now to Get Ready to file their 2023 individual federal tax return, using their official checklist and online guide with all kinds of pointers. As we mention throughout this article, it’s important for filers to gather all the correct information they need before filing their return.

The IRS recommends people should file electronically with direct deposit. This is still the fastest and easiest way to file and receive a refund. To avoid delays in processing, people should avoid filing paper returns whenever possible.

In conclusion, proactive preparation and strategic planning can make tax season more manageable. By adhering to these tips, you can save both time and money, making the tax-filing process smoother and more beneficial for your overall financial health.

Key 2024 filing season dates

  • January 12: IRS Free File opens.
  • January 16: Due date for 2023 fourth quarter estimated tax payments.
  • January 26: Earned Income Tax Credit Awareness Day.
  • January 29: Filing season start date for individual tax returns.
  • April 15: Due date of filing a tax return or to request an extension for most of the nation.
  • April 17: Due date for Maine and Massachusetts.
  • October 15: Due date for extension filers.

 

Important Disclosures: Securities offered through LPL Financial, Member FINRA/SIPC. InVestra Financial Services is another business name of Independent Advisor Alliance, LLC. All investment advice is offered through Independent Advisor Alliance, LLC, a registered investment adviser. Independent Advisor Alliance, LLC is a separate entity from LPL Financial.

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