It's officially tax season!

February 1, 2024

While many people dread this time of year, it can actually be a very smooth process as long as you know what to prepare for. Here are a few tips to help make the next month or two as stress-free as possible:

1. If you own a business, get your books in order. This can’t be overemphasized. If you can hand your tax professional a solid and clean Profit and Loss Statement and Balance sheet, then your taxes will be a breeze. There may be less stressful, but it’s worth mentioning in regard to taxes. Most people know aren’t sure how to clean up your books, it’s worth paying for a bookkeeper or accountant to do it. Errors on your tax return can be expensive, especially if the IRS is the one that finds them.

2. If you don’t own a business, make sure you have all of your forms. At JQ Financial Solutions, we verify your submissions against your previous year, so we’ll know if something is missing. But if you have a new situation, such as an investment account or some Ubering on the side, then you’ll need to make sure the forms are included. If you aren’t sure, ask. Tax professionals will know what forms you should expect based on your situation.

3. Know what to expect regarding refunds. The official position of the IRS is that most refunds will be processed and distributed within 21 days of a return being submitted. The last few years have introduced a major exception, though. If you claim the Child Tax Credit or the Earned Income Credit, then you will likely have to wait up to 2 months to get your refund. This isn’t a processing issue with the IRS. It’s to prevent fraud that occurs when someone claims a child they shouldn’t. The IRS wants to make sure that people have enough time to submit their returns. If the same child shows up on 2 returns, then they can block both and find out what happened without having to chase down the refunds that were sent out.

4. Have a reserve. Having $10,000 lying around makes most things in life less stressful, but it’s worth mentioning in regard to taxes. Most people know whether they are looking at getting a big refund, a big bill, or close to nothing based on previous years. However, surprises happen. You may end up with a $3000 tax bill because of a change in child status, the sale of some stock, or other one-off events. The good news is that you may not have to pay that $3,000 to the IRS. Sometimes, just moving money to a retirement fund can offset your tax bill completely. It’s better to pay your future self than Uncle Sam, right?