NORFOLK, Va. — Many people will break out a calendar this time of year and circle December 24, 25, 31, and January 1 as important dates.
But you may want to look ahead and circle January 18 and April 15, too. That's when the tax filing season begins and ends.
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“I really enjoy filling taxes," Norfolk resident and business owner Joseph Trahan said. "It's a great indicator of how well of a steward you are being with the resources that you've been given, and I think it's important to keep track of things."
For Trahan, preparing to file taxes is something that takes some time and happens throughout the year.
“When I was single, and before I was married, it was easy to just throw everything in one pot so to speak, and then you just go to one of the popular websites or one of the pop-up shops and file your taxes, and it was kind of like a day experience," Trahan explained. "But now, with a business and a rental property and a family and kiddos, that list of responsibilities adds up in a way that it’s imperative to have a little bit more planning involved."
He has multiple principles he keeps in mind when dealing with taxes. First and foremost, he said, is organization.
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"I think of my grandparents," Trahan explained. "They have an old filing cabinet and all the receipts get stuffed in the filing cabinet until the end of the year. I started off operating that way a while back and the receipts method definitely helped, but with application like Trello and, of course, Excel integration documents as well, you can really get super technical and super specific on tracking to keep up with it throughout the year."
If you’re going to have someone do your taxes, business and tax adviser Harry James recommends reaching out to that person now.
“It’s a good idea to get your prior year return, if you haven’t had somebody do it, get your prior year tax return to them so they can look at it (and) see if there are any issues," James said. "In fact, I like going over three years of prior returns because they're amendable."
Figuring out what tax credits you're eligible for can help save you time and money when you file.
December may also be a time to consider giving, not just because it’s the holiday season but because charitable contributions made by the end of the year up to 60% of your adjusted gross income can be deducted on taxes.
One thing that can’t be deducted, though, and that James believes a lot of people aren’t aware of, is home equity interest.
“People would borrow money on home equity to pay off credit cards," said James. "Well, the interest on that loan is not deductible. It is on your primary mortgage up to, this year, $750,000."
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Something else different to keep in mind is a change to the way the use of third party payment companies, like Stripe and PayPal, are taxed.
“If you use them for over $600, there’s a law on the books that is suspended for 2023e," James explained. "They’re required to issue a form called a 1099-K, which would go in your tax return. Now, if you get a 1099-K and you put it in your tax return and it’s for hobby or for personal use you can deduct it out. You don’t have to pay taxes on it. But if it’s business, you probably ought to be doing a business schedule."
While the tax filing deadline is April 15, you can file for a six month extension. That is only an extension to file the paperwork, however. Any taxes you owe still have to be paid by April 15.
