Steps to Tax Preparation

This year, 2022 federal tax returns (or applications for an extension) are due on April 18, 2023.

In our office we take information directly from you, we do not use a questionnaire. Either way, you'll need time to gather and organize the information. Here are some steps to take before meeting with us for your tax prep.

1. Mail, E-mail, Fax, Secure Portal, and/or drop off to our office. 

The sooner you meet with us, the sooner you can begin the process (even if you get an extension, as discussed later). It is especially important to act promptly if you anticipate a refund, so you can receive your money promptly.

2. Gather your information returns.

By the end of January, you should have received various types of information returns that you need. For each form, verify that the information matches your own records.

Here are some of the most common forms:

  • Government Issued ID for Taxpayers (Drivers Licenses) 
  • Form W-2 if you have a job
  • Form SSA-1099 if you received Social Security benefits
  • Various 1099s to report income such as cancellation of debt (1099-C), dividends (1099-D), interest (1099-INT), and nonemployee compensation paid to independent contractors (1099-MISC). 
  • Form 1095(A, B, or C) to report information from your health coverage.  
  • Various 1098s reporting mortgage interest (1098), student loan interest (1098-E) and tuition payments (1098-T)
  • Form W-2Gs for certain gambling winnings
  • Schedule K-1s from entities in which you have an ownership interest (e.g., S corporations, partnerships, limited liability companies, trusts or estates). 

3. Get your receipts together.

Which ones you require depends on whether you choose to itemize your personal deductions instead of claiming the standard deduction. You can decide to itemize if this produces the greater write-off. Unfortunately, the only way to know for sure is to determine the amount of your itemized deductions and compare them with your standard deduction amount.

For itemizing, get receipts together now by whatever system (or lack of system) used throughout the year to retain receipts for various deductible expenses. Look for receipts for medical costs not covered by insurance or reimbursed by any other health plan (e.g., a flexible spending account or health savings account), property taxes, and job-related and investment-related expenses. We do not need to review, or see your receipts, you can total the amounts and bring them with you.

If you have business income and expenses to report on schedule C, you'll need to share your books and records (e.g., QuickBooks or other accounting system; receipts for expenses; bank and credit card statements). The more organized you can be, the less time it will take us, which translates into lower fees for our service.

4. Gather records for charitable contributions.

If you made donations to charity and itemize your deductions, you need specific records to claim any write-off. For example, for contributions of $250 or more, you require a written acknowledgment from the charity stating the amount of your gift and that you did not receive anything (other than perhaps a token item) in return. If you're lacking an acknowledgment, contact the charity and ask for it. Again, we do not need to see the actual receipt, or acknowledgment, but you should have it in your records.

5. Brace yourself for tax law changes

You don't have to become a tax expert, but it helps to know about new tax rules, so you won't be caught off guard. The individual health care mandate brought in a slew of changes, including new forms for claiming the premium tax credit for eligible individuals who purchased coverage through a government Marketplace (exchange).

6. Make a list of personal information.

You probably know your social Security number, but do you know the number for each dependent you claim? Please bring with you the social security card, and birth certificate for each dependent you are claiming and other information (e.g., addresses of vacation homes and rental property; dates you moved; information about property you bought and sold, including dates, what you originally paid, what you received on the sale and expenses you had) needed to complete your return.

7. Decide whether to ask for a filing extension.

If you need more time to complete all of these tasks, you can request a filing extension to October 15, 2022and pay any projected taxes due. This will avoid any late-payment penalty, but we need to be sure that you pay what we think you'll owe to minimize or avoid any late-payment penalty. There's no extension beyond April 18 for paying the tax that is due.

8. Decide what to do about a refund.

If you expect a refund, you have several options on what you want the government to do:

  • Apply some or all of the refund toward your tax bill on the next return. The fund will be used for estimated taxes, reducing or eliminating the first installment of estimated taxes (due April 18, 2016).
  • Send you a check or deposit the refund directly into your checking or savings account.

You can split your refund among the direct deposit choices by having us complete Form 8888.

9. Find a copy of last year's return.

Last year's return serves as a reminder to us, your preparer - and you - of some items you don't want to overlook. Examples:

  • Payers of interest and dividends. If you received this income last year, look for 1099s for this year (unless you've sold stocks, closed bank accounts or made other investments changes that account for not getting a 1099 this year).
  • Charities. If you made small gifts, you may not have received any acknowledgment from the organization, but you can still deduct your gift as long as you have a canceled check or other proof. See last year's list of organizations you donated to and see whether you made similar gifts this year.

The Bottom Line

Start early doing prep work for your income tax so you'll have a successful tax return experience. Ideally, you will have been gathering and organizing your receipts all year. Having this information available for us not only will cut down on the time it takes us to prepare your return, but also the expense of the preparation.


Daniel F. Magrino and Staff