Next time I put something in this spot it will be April. We are already that far through tax season and it seems a little hard to believe. But see, this is why I started telling you a couple months ago that it really does serve you well to get a start on prepping for tax filing season before it gets away from you.

So yes, to file on time, you are now into the crunch period when any snags you hit become immediate difficult hurdles. This means that you need to start checking in with yourself and what you have done so far (even if what you’ve done so far only involves looking at a pile of mail on a desk).

Do you not remember if you got that one form that you were expecting? Go look and make sure. Many people have digital access to such forms as a W2s, but you probably don’t have that immediate access to everything (or at least would have to work to set it up). You want to be sure you have left yourself some time to get those forms before we reach zero hour.

Beyond that, though, actually open up and look at the forms you have received. Chances are really good that they all look exactly like they should and like you are expecting them to. That doesn’t mean that all the thousands and thousands of pieces of paper sent to taxpayers every year are correct, though, and it is better to find out if there is some discrepancy now than in two weeks.

Both of those are situations that occur every year, but as you have heard a lot during the past two years, we are currently living in unprecedented times. This has trickled down to your tax return, so there is going to be some information you need to have that you have not before. This includes knowing if you received any economic impact payments last year and how much if so. This is not the most difficult information to track down, but it’s going to simply feel better to do now than in two weeks.

Finally, many taxpayers with children also received advance payments of their child tax credit. If so, you are also going to need to know the total number of that money received.

And if this feels like a lot, well, depending on your situation it could be. And when things feel like a lot, that is when we don’t always want to deal with them, but it is also exactly why we should. So consider this a little confidence boost telling you that you still have time to do this if you can get on it now and a promise that you will feel better once you do.

Last week, I took what I thought would be a quick detour into the workings of the IRS as the agency set out to hire thousands of new workers. This is just a piece of what’s going in that organization, though, to the point where I feel I have to continue this week to give a more complete picture.

So first, there is this negative look at how difficult it may be for the IRS to fulfill its goal of hiring 10,000 workers. But hey, even if they only meet 2/3 of the goal (as the article intimates), that would still be more than 6,000 new hires, and that can only still help in the end, right?

Then when it comes to further help, we also got word last week from the agency itself that it is looking for around 200 new technologists to help with its trend to modernization. This is an inevitable push that will only have to continue, so it is heartening to see the IRS putting some muscle behind its words claiming that it is looking to modernize. One could certainly argue that it is still far behind where it should be in this arena based on how the current world works, but again, let’s give some credit for moving in the right direction.

And then there was also news of a funding increase for the IRS last week. And no matter how negative your view of the entity is, it would be really difficult to imagine it doesn’t do SOMETHING good with new hundreds of millions of dollars, right?

Now again, I know that such stories are not exactly rare (last week, remember?) and dealing with the IRS since the pandemic started has been quite a bear. I am certainly not giving continued space to such news to absolve the agency in any way. I do, however, think that it’s important to know that issues are at least being acknowledged and steps taken to hopefully fix them. And the more that we do know such things, the more we can set reasonable expectations for what dealing with the IRS will involve.

Nothing is currently fixed and nothing has a date on when it will be fixed. But now you know the lay of the land. And if you need to traverse any of that land because of issues you are currently having, do not hesitate to reach out to us.

And now on to hopefully something different next week … 

Every tax season comes with us delivering surprises to tax clients. Granted, some of these can be nice ones when people find out they will be receiving money they were not expecting. But some of them are unpleasant when people find they must pay money they were not expecting. Sometimes this happens because people didn’t know that money they received was going to be taxed and did not plan for it. So this week, I just wanted to give a little rundown of some of these types of income.

Of course, probably the biggest is freelance work for which one receives a 1099.  This may not always be so much of a surprise, but it can be something that people did not plan for. After all, when you get paid, one can see many places where that money would be helpful that aren’t into an account where it waits for an eventual tax bill. This is also a type of income that an increasing number of people is receiving.

If this is a situation you are still working through and have questions about, I will point you to this recent article, which gives a very good overview. It also has a strong conclusion that warns how easily the IRS can know you made some of this money even if you choose not to report it on your taxes.

Also in the realm of “the new” is virtual currency. The IRS asks about it right on Form 1040. Of course, this is also something that people are dabbling in more and more, many of them for the first time. And if you dabble well, you can make some money from it. As it always does, though, the IRS wants to know about all money that you earn. And with this being such a new area where people do earn, the agency is working to try to find ways to make sure that it is captured and makes it something else that you cannot avoid reporting.

Finally, this is nowhere near as new a concept, but any money received through tips should also be reported on your tax return. Now granted, this is an area that can get a little grayer, because it can be more difficult for others to track money received in cash. But if this is something that is coming to your attention as an area you are not handling well, then the sooner you work on turning that around (instead of just hoping it never catches up to you), the better.

For overall, the better you are at keeping track of all monies you receive – and assume you will be taxed on it – the better handle you will have on your overall situation and the better chance you have at not receiving any bad surprises when tax time comes. 

As I write this, it is march.

March!

When we start talking about tax season as soon as the calendar turns to a new year, April feels so far away. But then it is like, well, January hardly counts. And then February is still early. Suddenly, though, it’s March and now April is just next month.

And this is how procrastination builds. Few people start by saying they are going to put things off until the last minute. No one really wants to subscribe to that as a life rule. But when you have ‘enough’ time to take care of something whose deadline is in the future, it moves to the bottom of the to-do list and then the longer something lives there, the easier it is to keep it there.

At some point, you become acclimated to how much it doesn’t have to get done yet. Then each time something else comes up that is more important (or more fun), it receives priority and gets done first.

But now suddenly, it is already March.

So this week, I am not writing about big, surprising news (we knew the way the calendar worked when this season started) or any tips, tricks, knowledge, etc. Instead, this is just a call to put thought into when you are ACTUALLY going to get this stuff done.

I am not casting predictions of impending doom if you don’t get everything in order and complete this weekend. It is still EARLY March even, so there is time. But I am going to say it’s time to no longer leave your tax prep chores on the bottom of the list and start to carve out time for it. In fact, I will push this a little further and say that you should have it all done by the end of this month and leave April as your buffer.

If you are the type of person who needs a little more of a push to really get this done, though, then why not make your appointment to get your taxes done. If you have that on the calendar staring at you, you will be forced to complete what you need done beforehand.

For if you do get all this done, if you stop the procrastination spiral, then you can ease the stress that you feel next month. And how good a deal is that? Wouldn’t you choose to do what is needed now to give yourself peace in the future?