Nicholas Liou recently discussed how to start preparing for the 2023 tax season
The best way to relieve the stress of tax season is to plan. Nicholas Liou is a tax management consultant who understands the importance of preparing for tax season long before April.
“Planning helps individuals and businesses stay up-to-date on paperwork, so there are no financial surprises when tax day arrives,” Liou said. “I’m offering my tax preparation tips to help taxpayers avoid excessive stress next tax season.”
Organize Tax Paperwork
Nicholas Liou’s No. 1 tip for early tax preparation is to keep tax paperwork organized throughout the year. This includes receipts for any business expenses that can be used as credits. Staying on top of inventory numbers, cost of goods sold, and daily and monthly sales records helps business owners remain prepared year-round, whether they will do their taxes or turn to a tax preparer.
Individuals and families typically have less paperwork to submit, but it’s essential to keep track of W-2 forms, 1099 forms, form 1098, and any other forms provided by employers, mortgage companies, loan companies, and others.
Learn About New Tax Laws
Nicholas Liou explained that tax laws are often changing, and it’s important to stay up to date, especially for those who do their taxes. Not knowing about tax law changes can cause individuals or families to pay more taxes than necessary.
Adjust W-4 Withholding
Anybody who works a W-2 job fills out a W-4 form in January. That form determines how much money the government should withhold from the employee’s paycheck based on their tax status, dependents, deductions, and unemployment income.
Understanding the withholding amount can help an individual determine if they’ll have a refund after filing taxes or have to pay. Having to pay taxes due to not withholding enough can come as an upsetting surprise to many individuals and families.
Adjust Filing Status
The IRS uses five categories for taxpayers. These categories include single, head of household, married filing jointly, married filing separately, and a qualifying widow with dependent.
A person’s filing status can change from one year to another. Deductions and credits are different for each category, so individuals need to learn what their filing status means and how that can affect their refund or tax payment.
Enlist the Help of a Professional Like Nicholas Liou
Nicholas Liou is a former financial services tax professional and current tax management consultant. He and professionals like him are experts in helping individuals, families, and business owners file their taxes correctly and in the most advantageous way possible. Liou explained that hiring a tax professional can increase tax returns or reduce payments because they know the ins and outs of all deductions and credits.