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How to Prepare for a Painless Tax Season

Updated: Jan 19, 2023

Mariah Carey gets a bad rap this time of year for her overplayed holiday song, “All I Want for Christmas is You”. The song itself isn’t terrible (actually, it’s one of my favorites). But, as they say, too much of a good thing is no longer a good thing.

I’ve found that a sub-par, but lesser-played holiday song is more enjoyable to the ear than the once-an-hour Christmas anthem. Take “The 12 Days of Christmas”. Popular? Not really. Solid Christmastime song choice? Absolutely.


In that spirit, we bring you the 12 Days of Tax Prep. Are taxes the most popular thing going right now? No. (Never) Do you need to hear some solid, possibly unpopular, tax tips to make it a true Tax Season? Yes, you do. Who knows - maybe you’ll even enjoy it.


The 12 Days of Tax Prep:

  1. Have you identified all transactions? If you or your accountant have identified uncategorized expenses, income, or liabilities in your 2022 books, make sure to investigate and update them before the end of the calendar year. This will give you the best-case scenario if you do find something that needs to be adjusted before year-end!

  2. Did you change payroll companies this year? Changing payroll processors mid-year requires verification that all payroll records are accounted for in the current processor, and that the total amounts recorded as wages for W-2s matches the total amounts paid as recorded on 941s throughout the year.

  3. Have you hired in a new state? Any time an employee is hired from a new state, the employer has to create an account with that state’s Department of Revenue and Department of Labor and remit payroll taxes on that person’s behalf. If this isn’t done in time for the employee’s first payroll, adjustments may need to be made to ensure all payroll taxes have been remitted correctly.

  4. Are you ready to issue 1099s? Although you can collect W-9s after the first of the year, you’ll need them to prep and file 1099s, which must be filed no later than January 31. Waiting until after the end of the year can mean setting yourself up for a stressful January, so do yourself (and your accountant or tax preparer) a favor and start collecting W9s ASAP.

  5. Have you made your list… and checked it twice? To ensure accuracy of W-2s and 1099s, which must be filed by January 31, all earned income income for employees and contractors must be recorded within your payroll processing system by December 31. Additionally, any payments made outside of your payroll processing system may require an amendment to 941s to ensure correct remittance of applicable payroll taxes.

  6. Are there any business expenses hiding on your personal credit card? Business-related expenses may be tax-deductible. If they are paid from an account not associated with your accounting software, these expensespayments may not have been captured. If you’ve used personal funds to pay any business expenses in 2022, make sure to notify your accountant or make a correcting entry in your accounting software before December 31.

  7. Have you updated the employer-paid health insurance contributions in your payroll system? If these numbers are wrong, the insurance premium amounts paid by both the employee and employer are difficult and costly to update after the end of the calendar year. Confirm that the amount actually deducted from employees’ paychecks matches the rates provided in your benefits package. Additionally, confirm that the premium amounts paid by you and the employees matches the total premiums on your benefits invoices.

  8. Will you need to file a tax return in multiple states? Depending on your state, you may have annual filing requirements, even for a business entity with no expenses or revenue. Contact your accountant or your Secretary of State to determine what, if any, obligations you have to file.

  9. Any big changes in your life? Life changes can have major implications on how you’re filing your taxes. If you’ve gotten married, divorced, birthed or adopted a child, or had a child age out of dependent status in 2022, gather that documentation so that you’re ready to go when meeting with your tax preparer!

  10. Want to contribute to a retirement account? For most retirement accounts, contributions to tax-advantaged must be deposited into the account by December 31 to count toward 2022 contribution limits. This includes a variety of retirement account types. Common plans include both Roth and traditional 401(k), 403(b), and 457 accounts. (Contributions to IRA, SEP and health savings accounts can be made after December 31 and still be deducted on your 2022 tax return, as long as you contribute before filing your tax return.)

  11. Do you drive for business? Business mileage is deductible, but you must have a record of your travel. Your travel log should include the date, miles driven, and business purpose for each trip. You’ll also need to write down the odometer reading at the start and end of each year.

  12. Will your W-2 be accurate? For 2% shareholders of an S-Corporation, health insurance paid by the company is added to the owner’s W-2 and is taxable. If this wasn’t done during the year, a year-end adjustment will need to be made with your payroll provider to include the health insurance in taxable wages.

Crank up your preferred holiday tunes, check these tips off your year end list, and start your countdown to a stress-free tax season!


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Cheers,

The GreenOak Team


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This article is designed to provide information only and should not be considered legal or tax advice. Because of the complexity of the law and the variables in your own personal tax situation, you can’t rely on our advice specifically related to your unique circumstances. In order to get the best tax savings and legal advice available to you, you should consult with your own accountant, attorney or advisor regarding your particular facts and circumstances. GreenOak Accounting is an accounting firm that specializes in working with counselors and therapists in private practice. We provide monthly accounting & bookkeeping services, 1-time services and online courses. For more information on our specialized services for therapists please visit www.greenoakaccounting.com

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