7 Steps to Prep for Tax Season

By Jackie Lam, AFC®
Published on: 02/07/2024

With tax season in full swing, you might wish you had filed your returns, say, yesterday. While doing your taxes can be a headache-inducing endeavor, chunking down your to-do items into more manageable pieces can make for a smoother process.

In this guide, we'll walk you through information and some documents you may need to gather, ways to file your taxes, some common tax credits to be aware of and how to prepare if you owe taxes or expect a refund.

1. Be mindful of tax deadlines

First things first. You'll want to make sure you are in the know about when everything's due. Otherwise, you might find yourself late, which could mean getting hit with a penalty. Further, it could delay getting your tax refund. So be sure to check this year's tax deadlines.

The IRS reminds taxpayers the deadline to file a 2023 tax return and pay any tax owed is Monday, April 15, 2024. Taxpayers living in Maine or Massachusetts have until April 17, 2024, due to the Patriot’s Day and Emancipation Day holidays. If a taxpayer resides in a federally declared disaster area, they may have additional time to file.

2. Gather your information and documents

To get started on your tax prep, round up required information and documents.

Here's a few pieces of personal information you could need:

  • Social Security number or tax ID number (TIN)
  • If married, your spouse's full name, date of birth, or SSN or TIN
  • If one has been issued to you, an Identity Protection PIN (this is a six-digit PIN that's usually sent by mail)
  • Routing and account numbers of your bank account. That way, you can receive your refund or pay taxes owed with your bank account.

If you prefer, you can also pay over the phone, or by using a debit card, credit card, or through PayPal. While this may be a convenient option, you'll be charged processing fees if you use a debit or credit card.

Besides payment processor fees, it's a good idea to check with your credit card company to see how they treat tax payments. If these payments are considered a cash advance, in turn you'll likely be charged a higher interest rate.

As far as documents go, while it can depend on your personal situation, listed below are some typical documents:

  • Sources of income
    -W-2 forms
    -Rental income
    -Retirement income
    -Interest earned on savings accounts
    -Capital gains on investments or dividends
    -Other sources of income such as alimony
  • Retirement account contributions
  • Property tax and mortgage interest
  • Charitable documents
  • State and local taxes paid
  • Vehicle taxes paid or personal property tax on vehicles
  • Educational expenses

3. Choose how to file your taxes

There are three main ways you can file your tax returns:

  • By hand. If you're going the DIY route, you drop them in the mail to the IRS.
  • Tax software. You can use online tax software. Going this route means you can file your tax returns electronically or on paper. Some online tax software companies offer free filing if your annual federal adjusted gross income (AGI) falls under a certain amount.
  • Tax preparer. You can also work with a tax professional, such an IRS-approved tax preparer. You can do a search for tax professionals with certain credentials and qualifications—think an enrolled agent (EA), actuary, or certificated public accountant (CPA) through the IRS's handy search tool. You can also ask for recommendations and look up reviews you can find online. Be sure to check out the IRS website for recommendations about finding a tax preparer.

Depending on your income, you may also be able to find free tax preparation sites. VITA, which is short for Volunteer Income Tax Assistance offers free tax preparation help for those who generally make $60,000 or less a year, persons with disabilities, the elderly and limited English speaking taxpayers who need assistance in preparing their own tax returns. When working with a professional tax preparer, you usually need to provide the information and documents prior to your appointment or in some cases at the time of your appointment.

To reduce delays in your tax preparation, make sure you ask them for a list of documents you will need and have them ready. If it's your first time working with a tax professional, come equipped with last year's tax returns. You'll also likely need to fill out what's called a tax organizer, which provides a checklist of documents you should have ready, and asks you basic questions.

It's a good idea to book an appointment as early as possible—perhaps in February or March. Why's that? It's crunch time for tax preparers, so you don't want to wait until the 11th hour. Otherwise, you might find yourself struggling to find a tax pro who is still accepting new clients.

4. Be in the know on tax credits

A tax credit can decrease the amount of taxes you owe. These are dollar-for-dollar amounts you can claim on your tax return. Some tax credits are refundable. In other words, if the amount of taxes you owe is less than the tax credits you'll receive, you can receive the difference in your refund. To be eligible for these credits, you typically have to fall within certain income limits.

Here are a few tax credits to keep in mind if you have children:

Earned Income Tax Credit (EITC). If your income is in the low-to-moderate range and you have qualifying children, you might be able to scoop up this valuable tax credit.

Child Tax Credit (CTC). If you have qualifying children, you can receive up to $2,000 per child. Plus, up to $1,500 is refundable.

Lifetime Learning Credit (LLC). If you, a dependent or spouse paid for eligible higher education expenses for a student at an eligible institution, you can scoop up to $2,000 credit each year on your tax return. The beauty of this credit is there's no limit to the number of years you can claim it.

American Opportunity Tax Credit (AOTC). Formerly known as the Hope Credit, if you or your children are pursuing higher education, the AOTC is a credit of up to $2,500 per student, per year. This is good for the first four years your student is in an eligible program, and you can receive up to 40% of any credit leftover refunded.

5. What to do if you owe taxes

If you end up owing Uncle Sam this year in taxes, you can link up your bank account and send electronic payment that way. You'll need to provide your routing and account number.

If you're not able to foot the full amount, no need to fret. The IRS has several options for you to pay off what you owe. To understand your options, you can talk to a talk professional, or reach out directly to the IRS. No matter what route you decide on, there are forms and requirements you'll need to submit.

6. What to do if you're getting a refund

If you expect a refund this year, that's great news! The IRS's Where's My Refund? is a handy tool to check the status of your tax refund.

To get your refund in a speedy manner, you can link up your bank account and have the funds directly deposited into your account.

To make the most of your refund, the IRS allows you to divvy your refund into up to three separate accounts. That way, it can go into different goals, such as your savings account for an emergency fund, a different savings account for a short-term or long-term goal, or your checking account to pay some debt down.

If you use a paid tax preparer, you can consider a Refund Anticipation Check (RAC) or Refund Advance Loan. The RAC allows part of your refund to be used to pay for your tax preparation fees. With a RAL, a fee-based tax preparer might offer you an advance on your refund. That way, you can receive a portion of your expected refund ahead of time.

If you're considering a RAC or RAL, be sure to review information in the link above before your appointment, and note any fees and charges, as well as the timing, to see if it might be a good fit for you.

7. Beware of tax scams

Tax scams are everywhere this time of year.

To protect yourself and avoid falling victim to a tax scam, watch out for impersonators. You could lose money or your sensitive information could fall in the wrong hands. A tax scam might come in the following forms:

  • Getting bogus mail that claims you're owed a tax refund.
  • Would-be thieves might also lure you into using your wage information on your return, promising you'll snag a huge refund.

Know that the IRS will never reach out to you initially via social media, email, or texts. So, if you get a text claiming to be from the IRS, know it's a scam.

We hope that this guide is helpful in a smooth-going tax season. By getting a jump-start now, gathering the required information and documents, and knowing the ins and outs of getting a refund, you can rest easy knowing you're fully prepared.

About the author

A personal finance writer for over 8 years, Jackie Lam covers money management, lending, insurance, investing, and banking, and personal stories. An AFC® accredited financial coach, she is passionate about helping freelance creatives design money systems on irregular income, gain greater awareness of their money narratives, and overcome mental and emotional blocks.

Her work has appeared in publications such as Bankrate, Time's NextAdvisor, CNET, Forbes, Salon.com, and BuzzFeed. She is the 2022 recipient of Money Management International's Financial Literacy and Education in Communities (FLEC) Award, and a two-time Plutus Awards nominee for Best Freelancer in Personal Finance Media. She lives in Los Angeles where she spends her free time swimming, drumming, and daydreaming about stickers.

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Written on February 7, 2024
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