Got a tax plan?
GSE Money in the Making08/23/23
Let’s face it: filing taxes isn’t as fun as chasing your dreams. But no matter how busy or big-time you are, every year on or around April 15th we all have to get our paperwork in order, crunch some numbers, and file taxes. But don't worry, we can help you tackle tax season like a boss.
Software vs. accountant
The first decision you'll need to make is how to file your taxes. Do you want to hire an accountant to do the heavy lifting? Or use one of the gazillion software offerings out there?
It might be worth investing in a tax professional to help ensure you're getting all the deductions and credits you deserve.
While it may seem like an added expense, a good tax advisor can potentially save you money by helping you find deductions or credits.
Ready to take your savings to the next level? Then we have to talk about one of the best ways to score big savings ahead of time: Pre-tax benefits (a.k.a. the ability to pay for certain expenses before you're taxed.)
If you’re an employee (not self-employed), you can exclude eligible expenses from your wages subject to tax withholdings. We’re talking things like subway passes and gym memberships. So if you want to keep more of your hard-earned cash, talk to your HR department to learn what else can be excluded from your gross income. They should have all the deets.
Pre-tax benefits can be super helpful if you have a higher income level, because they can help you go from a higher tax bracket to a lower one. Translation: Smaller taxes. Bigger paycheck. More bubble tea for you.
Form frenzy. Simplified.
When it comes to tax forms, there’s a lot of different kinds. And they all have names that kind of sound the same. But there’s three big ones you need to know.
First up is the Form W-4, which you'll fill out when you start a new job. This form is like a game of 20 questions, asking about your marital status, dependents, and exemptions to determine how much of your salary to withhold for tax purposes. Don't worry, you can always reach out to your tax advisor if you want professional advice.
Next is the Form W-2, which is like the report card of your income. Your employer will typically send it to you at around the beginning of the year to document your wages and how much they withheld for taxes. Keep an eye out for it in the mail, you'll need it to prepare your income tax returns. Good times.
If you're self-employed or hustling as a freelancer or independent contractor, you'll likely receive a Form 1099-NEC reporting the amount paid to you. This form helps the IRS determine whether you paid the right amount of taxes. And don't forget about Form 1099-INT if you earned at least $10 in interest from an account, as well as Form 1099-B for your investment accounts detailing any gross proceeds. (That includes you, stock market mavericks)
The more deductions you claim, the more money you could keep in your pocket. So keep track of any expenses that might qualify, like student loan payments, charitable donations, health insurance premiums, mortgage interest, or business expenses if you're self-employed.
What's better than getting paid? Getting paid twice! That's what a tax refund can feel like. But it's actually money that the government owes you because you overpaid on your taxes. So, if you had too much money withheld from your paycheck or made too many tax payments, a refund could be coming your way! You’ll receive your refund via check or direct deposit, and it's typically sent within a few weeks after you file your tax return. Remember, a tax refund isn't free money, it's money that was yours all along.
The IRS is required to pay interest on individual tax refunds that are issued more than 45 days after the tax filing deadline (usually April 15th). So, if you're expecting a refund and it's taking longer than expected, keep an eagle eye out for any interest payments you may be owed.
Need more time? File an extension
Filing for an extension is like calling a tax timeout. It gives you a breather to make sure you have everything in order before you file. You can request an extension by filing Form 4868. This will generally give you an extra six months to file your tax return, as long as certain requirements are met. Just keep in mind, an extension doesn’t give you more time to pay any taxes owed. If you think you’ll owe money, it’s important to estimate and pay as much as you can by the tax deadline to avoid penalties and interest charges.
If it turns out you overpaid, the IRS will issue you a refund after you file your taxes. Or you can have them apply it to next year’s payment if you pay quarterly estimated taxes…Kind of like getting store credit from the IRS.
Taxes may not be the most exciting topic. But they can have a big impact on your earnings. So you’ve got to dig deep and file that return (plus, you might need your old tax return for things like apartment rental applications).
Luckily, taxes aren’t as hard as they seem. By taking advantage of pre-tax benefits and eligible deductions and keeping track of your tax forms like Forms W-4 and W-2, you'll be ready to tackle tax season like the boss you are. And remember you can always hire a tax advisor to help. Ok, you got this! (insert high five here).