8 Steps To Take Before You Prepare Your Taxes

A little prep work can save you time and money

Almost 85 million taxpayers pay professionals to complete and submit their tax returns, according to the Internal Revenue Service (IRS). If you're one of them, it is important to organize your receipts, forms, and other documents well before tax time.

Your preparer may take information directly from you or ask you to complete a questionnaire. Either way, a little preparation will help you get through the process quickly and easily. Even if you do your own taxes, the steps below will help you get organized.

Key Takeaways

  • Gather all the annual tax documents you've received that record your taxable income and deductible expenses, most of which will arrive by the end of January.
  • Collect all your receipts and organize them by category if you itemize your deductions.
  • You don't need to bother with the receipts if you use the standard deduction.
  • Dig out a copy of last year's taxes for reference.
  • Your tax pro, tax software, or the IRS has all the tax forms you'll need for your tax return.

1. Choose a Tax Preparer

If you don’t have a tax preparer, a good way to find one is to ask friends and advisors (such as an attorney you know) for referrals. Be sure the person you choose has a preparer tax identification number (PTIN) showing they are authorized to prepare federal income tax returns.

Be sure to inquire about how much they charge in fees. This, of course, depends on the complexity of your return. Avoid using a firm that takes a percentage of your refund. The IRS website has tips for choosing a preparer and a link to the IRS directory of preparers, which you can search by credentials and location.

In Sept. 2022, Florida taxpayers affected by Hurricane Ian were granted extensions on their tax filings. And in Jan. 2022, taxpayers who were victims of wildfires and winds in areas of Colorado were also given extra time to submit returns and make tax payments. If your area has been hit by a disaster, you can consult IRS disaster relief announcements to determine whether you are eligible for help.

2. Schedule an Appointment

The sooner you meet with your preparer, the sooner you should be able to complete your return—even if you decide to file for an extension. If you anticipate a refund, you'll get that sooner, too.

If you wait too long to schedule an appointment with a tax preparer, it might not happen before the filing deadline. That means you could miss out on opportunities to lower your tax bills, such as making a deductible contribution to an individual retirement account (IRA) or a health savings account (HSA).

3. Gather Your Documents

You should receive all the tax documents you need from your employer or employers as well as from banks, brokerage firms, and others with whom you do business by the end of January. Check that the information matches your own records on each form.

These are some of the most common forms:

  • Form W-2 if you had a job.
  • The various 1099 forms that report other income you received, such as dividends (Form 1099-DIV), interest (Form 1099-INT), and nonemployee compensation paid to independent contractors (Form 1099-MISC). Brokers aren't required to mail Form 1099-B, which reports gains and losses on securities transactions, until mid-February, so those may come a little later.
  • Form 1098 for reporting any mortgage interest you paid.
  • Form W-2G if you had certain gambling winnings.

The better organized your records are, the less time it will take a preparer to process your taxes, which translates into lower fees for their service.

4. Round Up Your Receipts

The receipts you'll need to provide depend on whether you itemize your deductions or claim the standard deduction. You'll want to choose whichever produces the bigger write-off, but the only way to know for sure is to add up your itemized deductions and compare the result with your standard deduction.

For the 2022 tax year, the standard deduction for single taxpayers is $12,950; for married couples filing jointly, it is $25,900. Those figures increase in 2023 to $13,850 for singles and $27,700 for married couples filing jointly.

Make sure you look for receipts for medical costs not covered by insurance or reimbursed by any other health plan (such as a flexible spending account (FSA) or an HSA), property taxes, and investment-related expenses. These are all subject to limits, but if they're substantial enough, it may be worth your while to itemize.

If you itemize your deductions, you'll also need to collect any backup you have for charitable contributions. For example, donations of $250 or more require a written acknowledgment from the charity stating the amount of your gift and that you did not receive anything (other than perhaps a token item) in return. If you don't have such an acknowledgment, contact the charity and request it. You can find more details on charitable deductions in IRS Publication 1771.

If you have business income and expenses to report on Schedule C, you will need to share your books and records, such as QuickBooks or any other accounting system, receipts for expenses, and relevant bank and credit card statements.

5. List Your Personal Information

You probably know your Social Security number (SSN), but do you know the Social Security number of each dependent you claim? You'll want to jot those down (in a safe place, of course), along with any other information your tax preparer is likely to need.

If you own a vacation home or rental property, for example, note the addresses. If you sold a property in the past year, note the dates you bought and sold it, the amount you originally paid for it, and how much you received from the sale.

6. Decide Whether to File for an Extension

If you need more time to complete all of these tasks, you can request an extension to October 15th for filing your tax return. However, you'll still have to estimate the amount of tax you owe and pay that amount by the regular April deadline to avoid penalties and interest.

7. Plan Ahead for Any Refund

If you expect a tax refund, you have several options for how it's handled.

  • You can apply some or all of the refund toward next year's taxes. If you usually pay estimated taxes throughout the year, that can help cover the first quarterly installment.
  • The government can send you a paper check by mail or deposit the refund directly into your checking or savings account.
  • You can contribute some or all of your refund to certain types of accounts (IRAs, health savings accounts, education savings accounts) or buy U.S. savings bonds through TreasuryDirect.

You can also split your refund among the direct deposit choices by completing Form 8888.

You'll need to let your tax preparer know what you want to do so they can indicate it on your return.

8. Find a Copy of Last Year’s Return

If you use the same preparer you used last year, they will likely have your previous information. If you use a new preparer, last year’s return can serve as a reminder to the preparer—and you—of some items you don’t want to overlook. Here are two examples:

  • Interest and dividends: Last year's return should indicate which banks, mutual funds, and other financial institutions sent you 1099 forms. Use that list to make sure you received 1099s from them again this year (unless you closed those accounts or sold the investments in the meantime).
  • Charitable deductions: If you made small gifts, you might not have received any acknowledgment from the organization, but you can still deduct these contributions as long as you have a receipt, canceled check, or other proof. Consult last year’s list of organizations you donated to and see whether you made similar gifts this year. The list can also help you remember to make a donation this year to charities you usually support.

When Is the Deadline for Filing a Tax Return?

Income tax returns are generally due on April 15 following the tax year. However, taxpayers have until Tuesday, April 18, 2023, to file their 2022 tax return because Monday, April 17, is a holiday (Emancipation Day) in Washington, D.C.; it is also Patriot's Day in Maine and Massachusetts .

IRS may also extend the filing deadline in certain, non-holiday situations. For instance, the deadline for filing 2020 tax returns was extended from April 15 to May 17, 2021, due to the "unusual circumstances related to the pandemic." That extension also postponed the deadline for tax payments to May 17, 2021.

How Much Does Tax Preparation Cost?

For 2020, the typical cost for tax preparation using Form 1040 was $220 when the standard deduction was taken and $323 when deductions were itemized, according to a survey from the National Society of Accountants.

How Do I File an Extension With the IRS?

Income tax returns are generally due on or around April 15 each year. If you can't file on time, you can file for an automatic six-month extension using Form 4868. Keep in mind that the extension applies to filing your tax return—not to paying any taxes you may owe. To avoid penalties and interest, you'll need to pay your taxes by the regular filing deadline (usually April 15, but April 18, 2023, for tax year 2022).

The Bottom Line

Whether you do your own taxes or hire someone else to handle the task, organizing your records in advance will save you time and, in the case of a paid preparer, money. The earlier you start, the more smoothly it should go, and the sooner you'll have put the process behind you for another year. For more advice, visit the IRS's own list of "steps you can take now to make tax filing easier in 2023."

Article Sources
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.
  1. Internal Revenue Service. "Filing Season Statistics for Week Ending December 3, 2021."

  2. Internal Revenue Service. "Directory of Federal Tax Return Preparers With Credentials and Select Qualifications."

  3. Internal Revenue Service. "Need Someone to Prepare Your Tax Return?"

  4. Internal Revenue Service. "IRS: Hurricane Ian Victims in Florida Qualify for Tax Relief."

  5. Internal Revenue Service. "IRS Announces Tax Relief for Colorado Wildfires and Straight-Line Winds."

  6. Internal Revenue Service. "Tax Relief in Disaster Situations."

  7. Internal Revenue Service. "Retirement Topics - IRA Contribution Limits."

  8. Internal Revenue Service. "About Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans."

  9. Internal Revenue Service. "IRS to Employers: Remember February 1, 2021 Deadline for Form W-2, Other Wage Statements."

  10. Internal Revenue Service. "2022 Form W-2."

  11. Internal Revenue Service. "2022 Form 1099-DIV."

  12. Internal Revenue Service. "2022 Form 1099-INT."

  13. Internal Revenue Service. "2022 Form 1099-MISC."

  14. Internal Revenue Service. "2022 Form 1099-B."

  15. Internal Revenue Service. "2022 General Instructions for Certain Information Returns," Page 2.

  16. Internal Revenue Service. "2022 Form 1098."

  17. Internal Revenue Service. "2021 Form W-2G."

  18. IRS. "IRS Provides Tax Inflation Adjustments for Tax Year 2023."

  19. Internal Revenue Service. "IRS Provides Tax Inflation Adjustments for Tax Year 2022."

  20. Internal Revenue Service. "Charitable Contributions - Written Acknowledgments."

  21. Internal Revenue Service. "Publication 1771."

  22. Internal Revenue Service. "2021 Instructions for Schedule C (2021), Paperwork Reduction Act Notice."

  23. Internal Revenue Service. "Topic No. 152 Refund Information."

  24. CPA Practice Advisor. "April 18 is IRS Tax Deadline for 2023."

  25. Internal Revenue Service. "Tax Day for Individuals Extended to May 17: Treasury, IRS Extend Filing and Payment Deadline."

  26. National Society of Accountants. "2020-2021 Income and Fees of Accountants and Tax Preparers in Public Practice," Page 18.

  27. Internal Revenue Service. "About Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return."

  28. Internal Revenue Service. "Extension of Time To File Your Tax Return."

  29. IRS. "Steps to Take Now to Get a Jump on Your Taxes."

Take the Next Step to Invest
The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace.