Tax return season is again upon us. While it may seem daunting to file another round of tax returns, there are many small things taxpayers can do to stay ahead of the game. Rather than pushing it off, consider the tips below from Ashley Weeks, Wealth Strategist at TD Wealth and, as always, talk to your tax advisor, accountant or CPA about your specific circumstances before acting.
Tax forms are typically available at the end of January. A few forms are allowed to arrive in mid-February or later, but many Americans can file early, and there are a lot of good reasons to complete your tax return sooner rather than later.
The Internal Revenue Service (IRS) processes returns on a first-come, first-served basis so, if you’re due a refund, the sooner you file, the sooner you can get your money. The IRS typically issue refunds in less than three weeks, and you can check the status of your refund online to learn about any delays.
Even if you owe money, there are still benefits to filing early. Tax money is due by April 15th regardless of when you file your tax forms. Rather than spending time coming up with an estimate and filing for extension, get organized so you have time to make your payment. If you can file earlier in the year, you won’t have to revisit your tax forms again over the summer.
Finally, the sooner you complete your tax return, the less time a fraudster has to compromise your identity and falsely claim your refund.
Watch for fraud
Fraud is on the rise, so it’s important to stay vigilant. If someone gets a hold of your private information, they can claim your refund before you do. File early and use the IRS self-selected five-digit PIN number when you file online. Your PIN number is the same from year to year, so make sure yours is handy and in a secure place no one else can access.
Note that the IRS will never initially contact you by email or text. They will send a letter in the mail. Don’t give away personal information through email or over the phone.
Tax forms and supporting documents should be saved, but shred any other sensitive items you no longer need, especially anything with identifying information.
For anyone who has been a victim of identity fraud, the IRS offers an identity protection pin (IP PIN) that will confirm your social security number and validate your identity.
Pull money out of retirement accounts on time
Individuals who are 73 years old and older are required to pull money out of their retirement accounts each year (this is called the Required Minimum Distribution or RMD) and must do so by December 31st. There are exceptions for the first year, when individuals are given a grace period until April 1st of the following year, but generally, penalties of 25% can be implemented for those who pull out late. Check your documents and plan ahead, so you don’t have unnecessary expenses. If you missed the deadline, you may be able to have the penalty waived.
Take note of 4th quarter payments
With 2023 behind us, it’s easy to think that you’re done making tax payments for the prior year. But fourth quarter payments are still due by January 15, 2024, and interest and penalties may accrue if not paid on time. Keep good records so you file the proper amounts on your final tax return.
Other ways to benefit
Even though 2023 is over, there are still a few ways to financially benefit on your 2023 tax return.
Make sure you’ve contributed the maximum amount to your Individual Retirement Account (IRA), something you can do until April 15th, 2024, and still take the deduction in 2023.
Check your flexible spending account to confirm you’ve used up your funds. If not, some employers allow a grace period so you can purchase medical supplies until March 15th, 2024.
Review and gather all medical expenses and charitable contributions if you are able to itemize your deductions. If you file a business return, review expenses such as vehicle or home office costs. Every little bit helps.
If you use tax software to prepare your return, download the latest version and make sure everything is in working order. If you work with a tax professional, reach out to them in January or early February before they get overloaded, and get a list of needed items.
Always have the prior year tax return handy. Previously filed returns can not only help you get your head back into the process, but they can also help you avoid overlooking an income and expense item for the current year.
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We hope you found this helpful. This article is based on information available as of February 2024 and is subject to change. It is being provided as a convenience and for general information purposes only. Any references to third party programs and/or services are informational and may not apply in your specific circumstances. This content is not intended to provide legal, tax, investment, or financial advice or to indicate that a particular TD Bank, TD Bank affiliate, or third-party product or service is available or right for you.
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