While it might be painful to see taxes removed from your paycheck or have to write a check every year, taxes are important.

While it might be painful to see taxes removed from your paycheck or have to write a check every year, taxes are important. They’re how our state and local governments pay for local health and safety services, roads, schools, parks and more things that you use every day. Our federal taxes pay for a lot of other things, too, including our military, medical research and a long, long list of expenses.

We’re in what accountants call “tax season” – that period of time between January and April when most people file and pay taxes, or maybe get refunds from overpaying during the year. Here are some things you need to know before sending off your paperwork to the IRS.

First, put these important dates on your calendar!

• The tax filing deadline is April 18, 2023.
• The extension deadline is Oct. 16, 2023.

For some people, filing taxes is as easy as getting a single form from your employer, filling out some easy paperwork and sending it in to the state and federal government. For others, it can take a long time to gather up documents from various employers, bank accounts, investments, loans, expenses for things like childcare or home improvements and more.

If you don’t think you can gather up all of your information and get your taxes filed before April 18, you can ask for more time – it’s called “filing an extension.” Just remember that the extension applies for 6 months to the paperwork, not to the payment. If you file an extension and you think you might owe money, you still need to send the government a payment for the amount you think you might owe. And that money is due April 18 this year, even if you filed an extension.

For most people, it makes more sense (and is easier) to take the higher standard deduction. However, if you have lots of tax-deductible expenses, you may benefit from itemizing your deductions. Here are some things to remember about the most common deductions:

• State and local taxes. The deduction for state and local income taxes, property taxes and real estate taxes is capped at $10,000.
• Mortgage interest deduction. The mortgage interest deduction is limited to $750,000 of debt. However, people who had $1,000,000 of home mortgage debt before Dec. 16, 2017 will still be able to deduct the interest on that loan.
• Medical expenses. Only medical expenses that exceed 7.5% of AGI (Adjusted Gross Income) can be deducted in 2022.

Deductions you might forget about!

Deductions can significantly lower the amount of taxes you owe in April! Take a look back at the past year and make sure you claim deductions for the following, commonly-forgotten items:

• Out-of-pocket charitable contributions
• Student loan interest
• Moving expenses
• Childcare
• State tax you paid last spring!

Getting a refund?

Some people may get the nice surprise of a refund! If you overpaid your taxes during the year, you may get some money back. While it may be great to receive a windfall, many financial professionals say that getting a refund actually is not a good thing. Why? You essentially lent the government money, interest free. You could have put that money to work for you instead!

If you do get a refund, be careful about how you spend it!

Need money to pay what you owe?

If you need to pay your taxes but you can’t write that check, you have plenty of options! One is to request a payment plan from the IRS directly, if you think you can pay the taxes in a relatively short amount of time. The drawback is that you may be subjected to additional fees.

Another option is to come talk to us here at CommonWealth One! We offer personal loans and other solutions to help you come up with the cash you need to avoid penalties and interest.

If you have any questions, remember we’re here For You – For Life!