Filing taxes isn’t the highlight of most people’s year. It can feel overwhelming and potentially get quite expensive if you go in without a game plan. That’s why it’s important to prepare for your tax appointment in advance. Just like your financial plan helps keep your personal finances in order, some tax appointment planning can help you get your personal and business documents in order—making it easier to file your 2023 taxes. At this time of year, a lot of Wealth Enhancement Group clients have questions about what to bring to their tax appointments. This brief guide outlines the steps you can take to get ready.

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Tips to Help You Prepare for Your Tax Appointment

The tax filing deadline for the 2023 tax year is April 15, 2024, or October 15, 2024, if you file for an extension. While these dates may seem far away, it's always best to begin as soon as you can. By preparing your documents early, you reduce the stress of scrambling to file at the last minute and give your tax preparer time to take your personal situation into account and strategically identify applicable tax deductions.

According to the IRS, Americans file more than 150 million returns annually—and there are only so many tax preparers available. Here are some steps you can take to make sure your tax preparer won’t have to rush through your return:

Create a Folder

You'll receive all kinds of tax documents electronically and by mail. To keep it simple, create both electronic and physical folders and add documents to each folder as they arrive. Don't worry about organizing at this stage. Put the folder in a safe and confidential spot, and let your spouse or partner do the same. Anything that says IMPORTANT TAX DOCUMENT goes into the folder.

Create Categories

Once you've complied your digital and paper folders, it’s time to separate your documents into taxable categories. Simple categories you can use to group your tax documents include house, work, medical, rental, business, and so on.

Send Documents as a Single Package

Tax filing forms like W-2s and 1099s are due by January 31, 2024, so you’ll want to provide your preparer with your categorized tax documents by mid-February. Aim to send all of your documents in a single package so your tax preparer can get a clear overview of your income and expenses. If you receive any documents late, you can always send them later.

Getting Organized

Beyond the tax documents you received in the mail, your tax preparer will likely ask you for a range of additional information. This includes:

Personal Documents

For identification purposes, you’ll need to pull together several personal documents for you, your spouse, and any dependants. These include photo IDs, Social Security Numbers (SSNs), and birth dates. You should also bring a copy of your previous year’s tax return to your tax appointment. If you’re a small business owner, you’ll need your Employer Identification Number (EIN) as well.

Proof of Income

There are many forms of income you may need to report:

• Employment income: If you work for a company, you’ll receive a W-2.
• Self-employment income: If you work for yourself, you’ll need to report your income on a 1099-NEC and/or 1099-K.
• Unemployment income: This will be on your 1099-G.
• Social security benefits: This will be on your SSA-1099.
• Retirement income: If you receive IRA and annuity distributions, they’ll be reported on your 1099-R. For their part, 401(k) rollovers and Roth conversions are reported on both your 1099-R and Form 5498.
• Other income: Alimony, rental income, and investment income are all reported differently. If you’re not sure how to report this income, speak to your tax preparer.

Receipts for Your Expenses

While not all of your expenses are relevant from a tax perspective, you may be able to claim tax deductions for certain expense categories. Some of the common ones include:

• Charitable contributions: List the who, what, and when for each donation.
• Medical and dental bills: You can deduct qualified, unreimbursed medical care expenses that exceed 7.5% of your adjusted gross income.
• College tuition and student loan interest: You’ll receive a 1098-E tax form for your student loan interest.
• Retirement contributions that aren’t listed on your W-2.
• State and local taxes paid in 2023.
• Mortgage interest paid in 2023.
• Child or dependent care expenses.

If you have a lot of expense receipts to submit, you may want to digitize them. Several mobile apps allow you to take photos of your receipts and categorize them under different expense categories. As a time-saving tip, consider doing this throughout the year as your receipts come in. Ask your preparer if they suggest a specific app or software. The more aligned you are with your preparer, the more likely you’ll be able to establish a productive long-term relationship. Also, you could hire a bookkeeper to handle this for you.

Small Business or Self-Employment Data

If you’re filing your business tax returns at the same time as your personal returns, here is some of the information you should gather:

• Financial statements indicating your business revenues and expenses.
• Employer retirement savings plan contribution information.
• Mileage records for vehicles you use during the course of doing business.
• 1099s you sent to contractors or received from clients.
• Receipts for capital purchases and deductible expenses.
• Loan documentation.
• Home office expenses (you’ll need to know the square footage of your office compared to the size of your full home/apartment).
• Self-employed health insurance payments.

The Impact of Major Life Events

Beyond your standard tax preparation, it’s important to remember that major life events can impact your taxes too. If you experienced any of these big changes in the past year, you’ll need to catalogue, categorize, and account for the following information:

• Did you get married, divorced, or become widowed in 2023? These changes impact your income, Social Security payments, and other benefits. Your status as of December 31, 2023, is how you'll file for all of 2023.
• Did you welcome a new child or have one "age out" so you can no longer claim them as a dependent?
• Notify your tax preparer if you have moved, especially to a new state. If you’ve heard of people splitting time between states for tax purposes, they’re probably claiming state residency for income tax purposes, which requires you to spend at least 183 days in that state.
• Did you buy or sell a property? Was it a primary home, rental, or other type of property?
• Did you buy or sell a business? Have your tax preparer help you understand the implications.

·        Did you set up a retirement plan for you or your employees?

Don’t Try to Beat the System

If a taxable event happened, report it. Your tax preparer only knows what you share with them. An audit can be a big headache and cost you a lot more time and money in the long run.

Setting Yourself Up for Success

By taking time to prepare for your tax appointment in advance, gathering all the documents you need, and getting organized throughout the year, you’re doing more than setting yourself up for less stress during tax season. You’re also positioning yourself to realize better results, both now and over time. Your tax preparer will thank you.

If you have any other concerns about your tax situation, don’t hesitate to consult a Wealth Enhancement Group advisor. Our tax specialists have years of experience helping people like you and are here to answer your questions.

Advisory services offered through Wealth Enhancement Advisory Services, LLC, a registered investment advisor and affiliate of Wealth Enhancement Group®. Wealth Enhancement Group is a registered trademark of Wealth Enhancement Group, LLC.