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Five tips for preparing your 2022 taxes

As tax season approaches — the deadline is April 18, FYI — it’s important to start thinking about your tax plan. Whether you file on your own or use a tax professional, here are a few things to consider as you prepare for tax season:

  1. Organize your financial records.
    Before you start filing your taxes, make sure you have all the necessary documents and financial records. This includes W-2 forms, 1099 forms, mortgage statements, student loan 1098s, receipts, and any other relevant documentation. This will make everybody’s life easier.
  2. Maximize your contributions to retirement accounts.
    Raising your contributions within your 401(k) can help lower your taxable income and increase your retirement savings. It’s also a good idea to consider funding an IRA or HSA. Any contributions you make come directly off of your reportable income from the year. You’re not paying Uncle Sam — just yourself and your retirement account. Note: April 18 is the deadline to fund your IRA or Roth IRA to count toward the previous year’s contribution.
  3. Consider charitable donations.
    Charitable donations are a great way to give back to your community while also potentially lowering your tax bill. Just make sure to keep detailed records of your donations to ensure you receive the appropriate tax deductions.
  4. Consult with a tax professional.
    Tax laws can be complex and ever changing, and it’s always a good idea to consult with a tax professional to ensure that you’re taking advantage of all available deductions and credits while avoiding costly mistakes. March is a little late to find a professional for this year, but at Family Financial Partners, we have a whole list of folks we can recommend on short notice. Just get in touch with us, and we can help point you in the right direction.
  5. Start thinking about how to best use your refund.
    If you’re getting a refund, think about how you’re going to spend it: Maybe you can put it toward paying off a high-interest debt, adding to an emergency fund, funding a retirement account, or starting a child’s college account. Or maybe you can finally take that trip you’ve been dreaming about. Not everything has to be invested. If you’re looking for some ideas, Dave and Ryan talked about this on their most recent podcast. It’s definitely worth a listen.

Whether you’re a student, work full time for a corporation, or are self-employed, tax season can be a little stressful. However, having your plan in place will go a long way toward making the most of the process. If you have any questions, feel free to reach out to us today to see how we can help.

Tax and/or legal advice is not offered by Family Financial Partners. Please consult with your tax professional for additional guidance regarding tax-related matters.

Article by Dillon Harper and Jacob Buckley, MBA, Wealth Advisors at Family Financial Partners — a financial services firm in Lexington, Kentucky.

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