13 Steps to Prepare for Tax Season

By Janet Siroto · February 06, 2023 · 11 minute read

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13 Steps to Prepare for Tax Season

It’s that time of year again: Typically, by midnight on April 15, taxpayers must e-file or mail their federal and, if applicable, state tax returns for the previous calendar tax year without penalty. Well before the deadline, though, it’s wise to do your prep work, hunting down the necessary documents, finding a tax pro or software to help you through the process, and learning about any new tax deductions or credits you might be eligible for.

It can definitely be a challenge to get organized, but by following certain steps, you can be ready to file properly and on time. Here, we’ll help you along with important tips, including:

•   When is tax-filing season?

•   How do you prepare for tax season?

•   Should you hire a tax pro?

•   Which tax documents do you need?

•   By when do you need to file taxes?

When Is Tax Filing Season?

Tax season typically begins in January. So, for tax year 2022, January 2023 marks the start of the season. You should receive a Form W-2 by January 31st or, with any mail delay, soon thereafter. The same deadline applies to certain 1099-MISC forms for independent contractors. Each financial institution that paid you at least $10 of interest during the year must send you a copy of the 1099-INT by January 31st as well.

Waiting until the last minute to prepare for tax filing is never advisable. If taxpayers work for one employer, their taxes may not be complicated, but if they have side gigs or they’re self-employed, tax returns can take a while to fill out.

The due date for individuals to file their taxes is usually April 15th of a given year or, if that falls on a weekend, the next following weekday. However, Tax Day is Tuesday, April 18, 2023, for tax year 2022. This is due to the fact that the 15th is a Saturday and the observance of the Emancipation Day holiday in Washington, D.C. on the 17th. For this reason, the date that returns are due has moved forward an additional day to the 18th.

13 Tax Prep Tips for 2022

Before filing, here’s how to prepare for tax season.

1. Decide on Hiring a Pro or DIY

Taxpayers can either prepare and file their taxes on their own or hire a professional. If they choose the latter, they can go to a tax preparation service like H&R Block or contact a local accountant or other tax pro. Some people feel more secure with a professional who can guide them through the process, know the latest deductions, and perhaps help them avoid IRS audit triggers.

The costs for a professional vary, and the more complicated a return is, the higher the costs will be.

The IRS has a tool where taxpayers can find a tax preparer near them with credentials or select qualifications. Doing so will mean paying a fee. How much? According to the National Society of Accountants,in 2020-2021, the average price tag for preparing and filing an itemized Form 1040 with Schedule A, Schedule C (this is for sole proprietors of a business), plus a state tax return, was a not insignificant $515. For a simpler return, the average fee is typically closer to $200.

Or you could use software which is likely to cost less but require a greater investment of your time. For instance, TurboTax’s 2022 prices range from $59 and up, depending on whether you need additional features, like those for people who run their own businesses.

2. Consider Other Tax-Filing Options

You might also want to try this alternative: IRS Free File lets you prepare and file your federal income tax online for free. There are two options, based on income.

•   You can file on an IRS partner site if your adjusted gross income was $73,000 or less. This is a guided preparation, and the online service does all the math.

•   Those with income above $73,000 who know how to prepare paper forms and can do basic calculations can fill out and file electronic federal tax forms. (There is no state tax filing with this option, however.)

3. Collect Tax Documents

Gathering the right papers is an important part of preparing for tax season. By the end of January, you should have received tax documents from employers, brokerage firms, and others you did business with. They include a W-2 for a salaried worker and what are known as 1099s for freelancers and contract workers.

Employers will send the documents in the mail or electronically.

Investors might receive these forms:

•   1099-B, which reports capital gains and losses

•   1099-DIV, which reports dividend income and capital gains distributions

•   1099-INT, which reports interest income

•   1099-R, which reports retirement account distributions.

Other 1099 forms include:

•   1099-MISC, which reports payments in lieu of dividends

•   1099-Q, which reports distributions from education savings accounts and 529 accounts.

If taxpayers won anything while gambling, they’ll need to fill out Form W-2G. If they paid at least $600 in mortgage interest during the year, they’ll receive Form 1098, whose information can be used to claim a mortgage interest tax deduction.

A list of income-related forms can be found on the IRS website.

Last year’s federal return, and, if applicable, state return could be good reminders of what was filed last year and the documents used. That can help you pinpoint any missing tax documents.

Quick Money Tip: Direct deposit is the fastest way to get an IRS tax refund. More than 9 out of 10 refunds are issued in less than 21 days using this free service, plus you can track the payment and even split the funds into different bank accounts.

4. Look Into Deductions and Credits

Wondering whether to take the standard deduction or itemize deductions? The higher figure is the winner.

The vast majority of Americans claim the standard deduction, the number subtracted from your income before you calculate the amount of tax you owe.

For tax year 2022, the standard deductions are:

•   $12,950 for a single filer

•   $25,900 for a married couple filing jointly

•   $12,950 for a married couple filing separately

•   $19,400 for a head of household.

Those age 65 or older or who are blind can claim an additional standard deduction of $1,400 or $1,750 if using the single or head of household filing status.

Individuals interested in itemizing tax deductions can look into whether they’re eligible for a long list of deductions like a home office (and, if eligible, whether to use the simplified option for computing the deduction), education deductions, healthcare deductions, and investment-related deductions.

The IRS notes that you may benefit from itemizing deductions if any of these apply:

•   Don’t qualify for the standard deduction

•   Had large uninsured medical or dental expenses during the year

•   Paid interest and taxes on your home

•   Had large uninsured casualty or theft losses

•   Made large contributions to qualified charities

•   Have total itemized deductions that are more than the standard deduction to which you otherwise are entitled.

Then there are tax credits, a dollar-for-dollar reduction of the income tax you owe. So if you owe, say, $1,500 in federal taxes but are eligible for $1,500 in tax credits, your tax liability is zero.

There are family and dependent credits, healthcare credits, education credits, homeowner credits, and income and savings credits. Taxpayers can see the entire tax credits and deductions list on the IRS website.

Recommended: What Tax Bracket Am I In?

5. Be Sure to Include Dependents’ IDs

Details count (a lot) when filing your return, and one important point to include is the Social Security number for any children and other dependents. If you omit this, you may lose any dependent credits, like the Child Tax Credit, that you qualify for.

Also know that if you are divorced, only one parent can claim children as dependents.

6. Update Beneficiary Designations

On the subject of children, tax time is a good time to review and update beneficiary designations. While it won’t change your tax-filing calculations, it will potentially reduce the tax burden your beneficiaries may pay on what they inherit after you die.

7. Add to Your Retirement Contributions

As you get ready for tax filing, it’s wise to check your progress towards your retirement fund (hopefully you have one). Money that you put into a 401(k), 403(b), or other tax-deferred account reduces your taxable income. In other words, it helps minimize your tax bill. The contributions you make aren’t taxed until you decide to withdraw funds.

If you feel you can afford to contribute more, know that for 2022, the limits for tax deferred contributions are $20,500 for 401(k) accounts, with an additional $6,500 for catch-up contributions for taxpayers who are age 50 or older. Check the IRS website for more details.

8. Take Any Required Minimum Distributions

Another tax-filing tip: If you’ve reached retirement age, make sure you take any distributions that are necessary. For instance, if you’ve celebrated your 72nd birthday and have funds in a 401(k) or IRA, you must make your RMD, or required minimum distribution, by December 31st, or face a penalty of 50% of the RMD total. That’s a pitfall most people would want to avoid.

9. Make a Final Estimated Tax Payment

Taxpayers who do not have taxes withheld from their paychecks can pay estimated taxes every quarter to avoid owing a big chunk of change come Tax Day.

In 2022, quarterly estimated taxes were due on April 18th, June 15th, and September 15th, with the fourth due early in the next year, on January 17th, 2023.

Recommended: Complete Guide to Paycheck Deductions

10. Apply for a Payment Plan If Needed

What happens if you discover, at tax-filing time, that you can’t pay the full amount you owe? One option is to pay as much as you can and then set up a payment plan with the IRS for the rest. This is a method that gives you a longer time frame in which to pay what you owe. Depending on whether you have a short-term or long-term IRS payment plan, there may be setup fees.

11. File Electronically

Here’s an important tip: Prioritize filing electronically, especially if you anticipate receiving a refund. Electronic returns can typically be processed more quickly than paper ones, which means you’ll get your infusion of cash that much sooner.

Another benefit of filing this way is that your return is much less likely to have errors. Electronic returns tend to have just 1% with errors. But for “hard copy” paper returns, that number ratchets up to about 20% with mistakes.

Quick Money Tip: Typically, checking accounts don’t earn interest. However, some accounts will pay you a bit and help your money grow. An online bank account is more likely than brick-and-mortar to offer you the best rates.

12. Decide Whether to File for an Extension

What if you don’t quite have your act together and your tax-filing materials ready to roll on time? It happens. If you need more time to prepare your federal tax return, you can electronically request an extension until October 16th, 2023, to file a return. This involves filing IRS Form 4868.

To get the extension, you must estimate your tax liability and pay any amount due by April 15th to avoid penalties. That’s right: Getting an extension to file doesn’t mean you shouldn’t be paying your taxes in a timely way.

13. Avoid Tax-Season Scams

Filing a tax return can be enough to keep you busy without worrying about getting scammed. But unfortunately, there are fraudsters out there, trying to take advantage of the season. For instance, you might get an email, phone call, or even a text message that says it’s from the IRS. They may say there’s an issue with a return of yours and that they need to speak with you ASAP. Don’t fall for it: The only way the IRS will ever communicate with you is via U.S. mail, unless you are involved in some kind of litigation with them.

The Benefits of Getting Prepared Early

Now that you’ve learned more about tax filing, here are some reasons to get started sooner rather than later on your return.

•   Avoid deadline anxiety. For some people, procrastination can lead to a lot of stress as the filing date approaches. They risk having to pull the proverbial all-nighter to get their return done on time or wind up blowing the deadline. By starting sooner, you can chip away at the process of pulling materials together and completing forms and breathe a little easier.

•   Dodge processing delays. If you file earlier, you are likely to slip in before the deluge of returns hits the IRS’ offices. You might even get your refund (if you’re due one) sooner.

•   Take the time to plan. Perhaps you know you’re going to owe money. Or you’re not sure if that’s the case. In either scenario, starting the tax-filing process earlier will give you time to see what you may owe and then figure out how to pay any funds that are due.

The Takeaway

“Tax prep” isn’t a phrase signaling that big fun is on the way, but putting off the inevitable isn’t the best choice. Prepare for tax season as early as possible by gathering documents and information, choosing a preparer or getting ready to DIY, and learning about tax credits and deductions.

Better banking is here with up to 4.50% APY on SoFi Checking and Savings.


When can I start filing my taxes?

Tax-filing season begins in January; important forms like W-2s and 1099s are issued by the end of the month. Once you have all the documentation you need, you can file your return.

Should I use a tax preparer?

It’s a personal choice whether to use a tax preparer or software to do one’s tax return. A tax preparer will likely reduce the time you have to spend doing your taxes and can apply their professional knowledge to help you know what credits and deductions you qualify for. However, you will have to pay a fee for this service, with some estimates saying it could cost an average of $200 to $500, depending on the complexity of your situation.

What documents do I need to prepare for tax season?

You’ll need to gather a variety of documents for tax season, including income received (W-2s and/or 1099s to show earnings, 1099s that reflect interest and dividends earned), records of deductions (relating to home ownership, charitable donations, medical expenses, educational costs, and the like). And, of course, you’ll need personal information like your Social Security number and that of any dependents.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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