We’ve seen a lot of people file their tax returns – and a lot of the snafus that they make. Here are some of the things you want to avoid doing as you file your 2023 tax return.
But before we get into it… We are financial advisors in Morristown, NJ, providing financial advice for New Jersey residents as well as folks across the country. Before we get started, you may want to check out these New Jersey finance blogs we’ve written, in case they apply to you:
Should I buy a home in New Jersey or New York?
A checklist for moving to Morristown, NJ from NYC
What is the New Jersey 529 Plan and should I use it to send my kids to college?
Should you buy a New Jersey vacation home?
#1 Don’t neglect ALL necessary investment documentation
We consistently see people file their tax return without having submitted all of their investment tax documentation. Here are the typical omissions:
- New accounts you may have opened over the course of the year
- Accounts you may have liquidated over the year
- Schedule K-1 documents, which you receive if you are getting income from a partnership. These typically come out in mid-March.
If you haven’t received these documents by the 2023 filing deadline, you may have to file for an extension. It’s a good idea to think about anything you did that would have incurred tax.
Also, compare last year’s return to this one to make sure you are not missing anything. The three major forms of tax documents are:
- W-2s
- 1099s
- K-1s
Did you see the same types of documents this year, as you did last year? If not, is the change justified or is it perhaps an error?
Important:
Including all your investment tax documents isn’t just “nice to do.” If you fail to report income on your 2023 tax return, you’ll have to file an amendment, which can be a time-consuming and cumbersome process.
#2 Be ready to file electronically
Are you a paper monger?
We’ll break this news to you gently, then.
It’s not uncommon to find people who prefer to file their taxes in paper form. Nothing wrong with that in concept; but these days almost everyone is required to file electronically. If you have been in the habit of filing using a paper return, you may just be required to send in your 2023 tax return electronically – be prepared!
#3 Have a list of notes for your accountant
It’s a good idea to organize all of the important elements of your 2023 tax return for your accountant, instead of just sending over the documents. Your CPA is human and he or she may be missing something!
Make a list of items such as:
- Contributions to retirement accounts
- Qualified charitable deductions
- 60-day IRA rollovers
- Any changes in filing status
- Any new write-offs
#4 Tell your CPA about 2024 changes
It’s important to talk to your CPA about any 2024 changes before you file your 2023 tax return.
“But can’t it wait until the summer? The fall? Why do I need to talk to my CPA about this now, in the midst of all this tax filing stress?”, you may ask.
Here’s what many people don’t realize.
Things may have changed, and you may need a different approach versus how you paid taxes in 2023. For example, you may need to adjust estimated tax payments or use withholdings from a different income source. The vouchers for 2024 estimated taxes are filed when you file your 2023 tax return. Waiting until after the return is filed to have this conversation with your CPA can be problematic for your 2024 taxes.
Revved up to go file your 2023 tax return?
We are financial advisors in Morristown, NJ serving the local community and beyond. If you have questions about tax planning as a New Jersey resident, retiring in New Jersey, moving there, affording to live there, or (like us) are just plain old Bruce Springsteen fans, reach out and send us a message.