Tag Archives: taxes

Tax Season Tips

Tax Season Tips for 2023 

With the new year comes tax season. As we jump right into tax season, here are some tips to keep you organized, ahead of the game, and prepared to submit your taxes on time.  

Step 1: Remember to Keep ALL Tax Related Documents 

One of the biggest hassles is organizing and finding your information to be prepared for tax season. Whether you do your own taxes or get help from a professional, it is important that you begin to collect and organize the proper documents. This includes last year’s tax return, this year’s W-2s and 1099s, receipts, and so on. Here are some recommendations from TurboTax of what to keep and what NOT to toss:  

  • Print out a tax checklist to help you gather all the tax documents you’ll need to complete your tax return. 
  • Keep all the information that comes in the mail in January, such as W-2s, 1099s, and mortgage interest statements. Be careful not to throw out any tax-related documents, even if they don’t look very important. 
  • Collect receipts and information that you have piled up during the year. 
  • Group similar documents together, putting them in different file folders if there are enough papers. 
  • Make sure you know the price you paid for any stocks or funds you have sold. If you don’t, call your broker before you start to prepare your tax return. 
  • Know the details on income from rental properties. Don’t assume that your tax-free municipal bonds are completely free of taxes. Having this type of information at your fingertips will save you another trip through your files. 

Step 2: Organize Your Documents  

As you begin to receive and gather your documents, find a folder to carefully organize your information. It is easy to throw an envelope into a drawer and forget where it has been placed. You’ll thank yourself as you begin filing that you kept the information needed organized and ready for use. Remember it is important to keep ahold of past year’s documents as well, as those could be needed for filing. If you haven’t already, find an organization method that works for you to begin organizing all records and carry that method on from year to year. The rule of thumb is if you don’t know if you’ll need it, it is safe to go ahead and keep it, just in case.  

Step 3: Itemize Your Tax Deductions  

By itemizing your tax deductions, you could potentially save a substantial amount compared to taking the standard deduction. If you own a home, live in a high-tax area, or are self-employed it may be worth taking extra steps to itemize your deductions.  If your qualified expenses add up to more than the 2022 standard deduction ($12,950 for singles and $25,900 for married couples filing jointly) itemizing your deductions is worth it to take the time to do.  

Some items to consider itemizing:  

  • Mortgage interest 
  • Charitable donations 
  • A portion of medical expenses 
  • Home office  

Step 4: Make a Plan for How You Will File Your Taxes 

If you are filing your taxes and expect a return, filing electronically may be the best and quickest option for you. The IRS processes electronic returns faster than manual paper returns, which means you could expect your refund three to six weeks sooner, especially if you have it set to deposit directly into your bank account.  

Step 5: File Your Return ON TIME 

Do not wait to begin gathering your documents and making your plan for filing your information. If you need assistance, it is important to do your research ahead of time and be proactive so you can file and pay on time.  

If you can’t finish your return on time, make sure you file Form 4868 by April 18, 2023. Form 4868 gives you an extension of the filing deadline until October 16, 2023. On the form, you need to make a reasonable estimate of your tax liability for 2022 and pay any balance due with your request.  Requesting an extension in a timely manner is especially important if you end up owing taxes to the IRS. 

Tax season is a stress to us all. The key is to be organized and proactive in getting ahead of filing and paying your taxes, so you are not late and potentially owe more. If you are curious about the basics of taxes or want to be aware of any changes when filing your 2022 return, visit the IRS website for assistance.  

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taxes

How To Save On Your Taxes

Are you kicking yourself for how you handled last year’s taxes? You can feel better about next year by learning a little bit about tax savings now. 

Consider Donations

Not only is donating to charity a great way to give back to the community, but it is also a smart way to have a tax write-off. It needs to be a charity that is recognized by the IRS in order to do this. This will require some organization on your part over the course of a year. You will be required to have written records. It should say the date of the contribution, the amount you gave and to who. If the amount is over $250 and you don’t have a receipt, the IRS may reject it. 

Increase Contributions to Your Retirement

If you contribute to a 401(k) plan or an individual retirement account, you can reduce your income tax. You would need to increase the amount that is withheld from your paycheck automatically.

Start Saving for Your Child’s College Tuition

It’s never too early to start saving for your child’s education. A 529 is a college savings plan similar to an IRA except it’s for college. The contributions grow tax-free, and withdrawals are not taxed for a college education. You can either use this for your children or for yourself to take a fun college course in retirement. 

Review Tax Credits for Children

Having children is incredibly expensive. Double-check that you’re getting all the tax credits you qualify for. You can itemize medical and dental expenses. As we all know, these costs don’t come cheap. Whatever you are paying out of pocket for these costs may be itemized along with the child tax credit. 

Begin a Health Savings Account

To help decrease some of the common stress of medical bills, consider starting a health savings account. Contributions made to an HSA are pre-tax dollars that can be applied to medical expenses. If you contribute the maximum amount, you can potentially save thousands on your taxes this year. 

It is possible to pay less in taxes next year; you just need to put the work into finding some ways that you qualify for exemptions. For more ways to save, contact us at Peoples Bank & Trust. 

Peoples Bank & Trust Co.

Member FDIC

Equal Housing Lender

It’s the Season to Save Money: Tax Deductions

While it might not be on your radar, now is the perfect time to starting thinking about taxes. You may be thinking you just wrapped up tax season but April 15 will be here before you know it. The end of the year is the perfect time to make a few financially savvy moves to help trim down your tax bill.

While not all of the ideas below apply to everyone, they can help you fund your retirement account or even put you in a charitable mood.

Contribute the maximum to your retirement account(s) – If you have a tax-advantaged retirement account (meaning your contributions aren’t taxed), contributing the maximum lowers your taxable income, meaning you pay less on your tax bill. Even better? You’re helping contribute to your retirement savings fund!

Give to charity – As long as you have over $250 in costs directly related to helping a charity plus their acknowledgement (a receipt, statement, etc), you’re in good shape. Just be sure you also have the receipts from making all those meals or purchasing supplies. Remember, donations to individuals doesn’t count when claiming a charity deduction.

Job-hunting costs – If you were job hunting at all this last year (and have the receipts on hand), these costs can be deductible. Eligible expenses include transportation costs, food, lodging, cab fare, employment agency fees, costs of printing resumes, business cards, etc.

Give to family or friends – This category is a two-for-one! Not only do you give the gift of money but you reduce your tax burden. You can give up to $14,000 without having to file a gift-tax return, which lowers your taxable income, thereby reducing your tax bill.

Energy-saving home improvements – Made some energy-saving modifications to your home this year and have the documentation and receipts to prove it? You can claim a credit up to $500. While this isn’t a tax deduction, you can use the credit to help pay your tax bill if need be.

This list is just a start of tax deductions you can start planning for. For more information or questions, you’ll want to talk to your tax professional or Peoples Bank & Trust to help guide you. We hope this list provides you with a little inspiration to find some deductions this tax season!

 

Peoples Bank & Trust Co.

Member FDIC

Equal Housing Lender

5 Financially Savvy Ways to Use Your Tax Refund

Personal Finances

Getting your taxes done early not only takes one more thing off your to-do list but further allows you to start planning for the future. Working with your tax professional, determine how much your family may receive this year from a tax refund. No matter the amount, we recommend putting it towards your financial goals for the year. Here are some great strategies we’ve tried to get the best bang for our buck:

  1. Max out your 401(k) or Traditional IRA contributions. If you aren’t taking advantage of one of these two accounts, we highly suggest opening one soon! These tax-beneficial accounts help holders accumulate and grow their funds without the burden of tax at the time of deposit. Each account, however, is limited by how much you can contribute. By allocating funds into these account types it may not only help you save for retirement but also allow your money mature throughout the years, with no additional effort.
  2. Make an extra payment on your mortgage or student loan. Paying down your loan is always a great option when selecting financial goals. In the case of a mortgage, you earn more equity as you pay, while with student loans, you gain more momentum towards financial freedom. Instead of adding money to each monthly installment, we recommend creating one lump payment. By doing this you can you create a single but large decrease in your principal amount owed, drastically reducing your associated interest as well.
  3. Save for the 2017 holiday season. While holiday events, family gatherings, and memories are held dear, the burden of the season can pose potential problems for your personal finances. If you struggled saving last year, now is the perfect time to set aside funds for the holidays. Determine how much you need to pay for each aspect of your seasonal activities, and save as much as possible in a separate account from your tax refund. If additional funds are needed, automate your savings to transfer a specific dollar amount to this account each month.
  4. Pay off outstanding credit card debt. With one of the highest interest rates, credit cards are notorious for taking years to pay off. If you want to make a dent in your debt, we recommend tackling one card at a time.  Using your tax refund, see if you can eliminate smaller debts first. Then with the remaining funds, begin paying down each additional credit card. By paying off the card with the least amount of debt first, you can begin to snowball your way to financial freedom!
  5. Start saving for a vacation. Whether it’s a spring break, a summer adventure, or a fall festival, it’s never too early to start saving. Once you have determined a destination, then create a rough budget of the expected expense. Depending on your refund you may be able to pay for the whole trip outright, or you may need to couple the funds with some additional monthly savings. No matter how you choose to save, we recommend keeping your vacation funds in a separate deposit account so you’re not tempted to use them throughout the year.

If you still have questions on how to best use your tax refund, our personal bankers would love to help. At Peoples Bank & Trust, we can assist you in using all your savings options to help make the most of your money. Stop in and see us today!

 

Peoples Bank & Trust Co.

Member FDIC

Equal Housing Lender

4 Ways New Homeowners Can Save on Their Taxes

Home owners

Becoming a homeowner is an exciting and trying time in your life. Once all the papers are signed, and the keys turned over, it all seems worth it. That is until a pipe bursts, lightning knocks out the tree, and your dog decides to burst through the screen door. Not all hope is lost however. In return for your endless work, and commitment to a never ending to-do list, the U.S. Government has provided four tax-based ways to reward you for home ownership. See how to take advantage of these four tax breaks, and make the most of your new home purchase:

  • Early IRA Withdrawal: For many new homeowners, securing the initial down payment can be the first hurdle in their real estate journey. If you’re a first-time home buyer and have an IRA, or Roth IRA, the IRS will allow you to withdraw up to $10,000, penalty-free, to aide in the cost of your new dwelling!
  • Valuable Deductions: Between your mortgage interest, mortgage insurance, and real estate taxes, your home deductions could make a big dent in your taxable income. When preparing your taxes as a new homeowner, be sure to bring any mortgage documents, and escrow account information, to your tax professional to gain the full benefit of the deductions.
  • Renewable-Energy Tax Credit: Did you upgrade your home appliances to more efficient and environmentally-friendly options? Did you install a geothermal system in your home? If so, this helpful tax credit may be able to take a portion of that improvement cost out of your deductible income!
  • Tax-Free Profit on Sale: When you go to sell your home, the IRS allows you to avoid the capital gains tax on the profits you generate from the sale. This means that if your home’s value goes up $35,000 in the two or more years you live there, you are then able to retain the additional $35,000 your home is sold for without having to pay any taxes on those funds. One other major stipulation of this benefit is that in order to avoid the capital gains tax, you must purchase a new home as your primary residence within the next two years.

With these key homeowner tax breaks, the next thing to put on your to-do list is to make a plan for those tax refunds! If you have questions on how to best budget for your new home, don’t hesitate to stop in. We’d love to talk taxes, financing, or other improvement ideas you have for your home!

 

Peoples Bank & Trust Co.

Member FDIC

Equal Housing Lender