It's Tax Season! Here's how To Financially Prepare

Assalamu Alaikum, girlie!💐

Tax season is right around the corner! 📅 Whether you're feeling ahead of the game or already stressed out about the paperwork, it’s time to start thinking about how to prepare for a smooth and successful tax filing. Let’s make sure you don’t miss any crucial steps, and that you’re making the most of your hard-earned money, insha'Allah.

Today, I’m sharing a Tax Prep Checklist to get you organized, along with Top Tips to Maximize Your Tax Return—and some mistakes you’ll want to avoid this tax season.

So today, I’m a sharing:

1️⃣ A Tax Prep Checklist: 5 Things to Prepare for Tax Season

2️⃣ Mistakes To Avoid this Tax Season

3️⃣ Tips to Maximize your Tax Return

Let’s dive in! 💰✨

Disclaimer: This content is for educational purposes only, not tax advice. For personalized advice, please consult a licensed tax professional.

5 Things You NEED to Prepare for Tax Season

1. Gather Your W-2s and 1099s 📑
   Make sure you’ve got all your income forms ready. If you’re self-employed or have side hustles, you’ll need 1099 forms, showing the income you’ve earned. This can include payments for freelance work, side gigs, and more.

2. Get Your IRS Transcripts 📝
   If you’re missing documents or need a clearer picture of your tax history, order your IRS transcript. You can do this directly from the IRS website or by calling them. Transcripts can show your filed returns, income records, and account balances.

3. Collect Your Business and Investment Docs 📊
   Did you sell investments or run a side business this year? Get your investment sale forms, records of business expenses, and any other related documents. For business owners, make sure you have receipts and expense tracking ready.

4. Record Your Deductions and Credits 💵
   Take note of potential deductions (such as charitable donations or business expenses) and credits (like child tax credits or earned income credits). Be sure to track everything that could reduce your taxable income.

5. Double-Check Your Bank Details for Refund 💳
   If you’re expecting a tax refund, make sure your bank information is accurate and up-to-date to avoid delays. Opt for direct deposit to get your refund quicker! ⏱️

Mistakes You Shouldn’t Make This Tax Season

1. Not Keeping Track of Your Business Expenses 🧾
If you have a business, don’t forget to account for every expense. It might feel small at the time, but every little purchase can add up and reduce your taxable income. Keep good records to ensure you're not paying more than you need to.

2. Forgetting to Adjust Your Withholdings 💸
Did you receive a huge refund last year? That might mean you’re overpaying on your taxes each paycheck. Adjusting your withholdings means more money in your pocket throughout the year, instead of waiting for a refund. Check your IRS Form W-4, and make sure you're only withholding the amount that fits your actual tax liability.

3. Not Getting a Professional to Review Your Taxes 💼
Sometimes, we think we can handle our taxes on our own, but if your financial situation is complex, or if you’ve made big changes (like starting a business or investing), it’s worth getting a tax pro to double-check your return. They can spot deductions or credits you might have missed and give you a clearer picture of your financial position.

4. Ignoring Your Tax Obligations for the Year 🕰️
Tax time is not the only time to think about taxes! Be proactive throughout the year. Stay on top of quarterly payments if you're self-employed, and keep track of any income that’s not subject to automatic withholding.

Tips to Get Started on Your Financial Journey

1. Contribute to Retirement Accounts 💼
While it’s late to contribute for 2024, planning for the future is still a great way to reduce your tax burden. Contributing to a retirement account (such as a 401(k) or an IRA) can lower your taxable income, so you’ll pay less in taxes this year and save for your future. 📈

2. Look for All Possible Tax Credits 💵
Tax credits can directly reduce the amount of tax you owe, and there are several that you may qualify for. This includes the Child Tax Credit, the Earned Income Tax Credit (EITC), and credits for education expenses. Make sure to research any credits that may apply to your situation. 🎓

3. Use Your Tax Refund to Invest or Pay Down Debt 💪
If you receive a refund, consider using it strategically. Depending on the amount, you may want to allocate a % to invest, a % to charity, a % to pay off debt, and a % to spend! Use this opportunity to speed up your financial goals. 📉

4. Stay Organized for Future Tax Seasons 📑
Instead of scrambling every year, make a habit of organizing your financial documents and tracking your deductions regularly. If you’re self-employed or have a side gig, consider doing quarterly check-ins to stay on top of the game. It’ll save you time and stress when tax season rolls around again. 💪

Bonus Tip: Set a Goal for Your Return 🎯

You’ve got your refund or you’re paying your taxes, but let’s be intentional this year. Think about how you can use your return to get closer to your financial goals. Whether it's building your emergency fund, starting an investment portfolio, or taking a course to level up your skills, your tax return could be your opportunity to take one step closer to financial freedom! 🏆

If you’re ready to get your taxes in order and make the most of your refund, stay on track with your financial goals! Consider adjusting your withholdings for next year as you plan ahead. When you're prepared, tax season doesn’t have to be stressful! 🧘‍♀️

Wishing you a smooth and prosperous tax season! 🤲

Your #1 fan,

Fatimah🎊

Founder, Finance Girlie