We’re barely in the year 2023; everyone’s hoping for the best. But what trumps hoping? Being prepared. So gather up your receipts and take your pencils out and take a gander at these steps that you can do to prepare for the new tax year.

Determine and, if needed, update your filing status. Are you single, married, filing jointly, etc.? If you have not done it before, or there has been a change since last year, update yours. This status determines your tax bracket and how much tax you owe; it’s a major determinant of how to calculate your tax liability accurately.

Go over and review your tax withholdings.  As an employee, you need to be aware of the amount of tax that is being withheld from your paychecks. If you need to have more tax withheld, you can adjust the amount of tax withheld by completing a new W-4 form and submitting it to your employer. If you are self-employed, consider making estimated tax payments to ensure that you have enough tax withheld. There’s a tool you can use to estimate your withholding. It’s on the IRS website

Tax credits and deductions are yours for the taking. There are many tax credits and deductions that you may be eligible for. By claiming these credits and deductions, you can reduce the amount of tax you owe. Some common tax credits and deductions include the Earned Income Tax Credit, the Child, and Dependent Care Credit, and deductions for charitable donations and mortgage interest.

Keep your records pristine. Good record-keeping is essential for tax planning. Keep track of your income, expenses, and any tax documents you receive throughout the year. This will make it easier to accurately complete your tax return and claim any credits or deductions you are eligible for. Those envelopes with dividers are great for sorting, or simple Manila envelopes where you can write what’s inside can be a godsend.

Think of retirement now! If you are not already doing so, consider starting to save for retirement. There are several retirement savings options available, such as 401(k) plans, traditional and Roth IRAs, and employer-sponsored pension plans. Contributions to these plans may be tax-deductible, which can help reduce your tax liability.

Always review your tax situation annually. This ensures that you are taking advantage of all available credits and deductions and have the correct amount of tax withheld or making estimated tax payments. Keep all your records, receipts, paperwork, and others as much as possible and sort them out early. You’ll be so glad you did when April comes. Although, if you have too much on your plate, or life just makes it impossible for you to have everything ready and prepped, or you just can’t make heads or tails of all this paperwork, Peter Witts CPA can take the burden off of your shoulders and get you all squared away for this tax season, and we can start working with you as early as now.