As the festive season unfolds and Christmas approaches, the thought of filing your 2023 taxes might not be at the forefront of your mind. However, with the new year on the horizon, it’s worth considering as one more item to check off your to-do list. Mark J. Kohler, a certified public accountant (CPA) and small business attorney, recently provided insights and recommendations in an interview.
According to a recent CNBC report, if you’ve overpaid your annual taxes or withheld more than what is owed, you can anticipate receiving a federal refund. As of October 27, 2023, the average refund amounted to $3,054, according to data from the Internal Revenue Service (IRS). While the allure of holiday festivities may take precedence, it’s worthwhile to keep in mind potential financial benefits that come with diligent tax planning.
Kohler emphasizes the significance of work-related expenses for small business owners. Specifically, he underscores the advantages of correctly completing a 1099 form, a crucial document for reporting payments made to freelancers and contractors. By accurately documenting work-related expenditures, small business owners can maximize their deductions and potentially increase their tax refunds.
In a call to action, Kohler points out that many individuals may not fully grasp the available opportunities when it comes to tax planning. Surprisingly, more than 50% of Americans are engaged in some form of a side business. To capitalize on potential tax benefits, Kohler suggests taking proactive measures now. This involves creating a comprehensive list of expenses related to your side hustle, encompassing all the components and activities associated with your supplementary income endeavor.
The essence of this advice lies in recognizing that there are opportunities for financial optimization within the tax code, especially for those with side businesses. By acknowledging and actively addressing these opportunities, individuals can potentially enhance their financial well-being and secure a more favorable outcome when filing their 2023 taxes. As the year draws to a close, taking a moment to assess and organize your financial records may prove to be a valuable investment in your future financial stability.
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