Prepare early for the 2022 tax filing season
Filing your tax return can be as complicated as always, especially if you received stimulus payments or advance child tax credit payments. However, taxpayers can take steps now to ease the process of tax filing by preparing early for the 2022 tax filing season. Despite the complications that may arise from changes in policy or law, here are four things tax payers can do to prepare early for the 2022 tax filing season.
Gather and Organize your Tax Records
When you have all the needed tax records organized ahead of time, preparing an accurate and complete tax return is easier. This reduces the chance of errors that lead to processing delays. It also reduces the chance that you will forget to include a necessary document with your tax returns. As a result, it helps you get your refund faster. Here are the important tax records you need to file a return:
- Forms W-2 from employers
- Forms 1099 from banks, issuing agencies, and other payers. Including unemployment compensation, dividends, distributions from a pension, annuity, or retirement plan.
- Form 1099-K, 1099-MISC, W-2, or other income statements for workers in the gig economy.
- Form 1099-INT for interest received.
- And other income documents and records of virtual currency transactions.
Note: Taxpayers should hold on to any receipts for income from self-employment and other sources, they should also keep copies of tax returns and any supporting documents for at least three years.
Income documents such as tax forms help you determine whether you can deduct or claim credits. For example, people who need to reconcile their advance payments of the child tax credit and Premium Tax Credit will need their related 2021 information. Those who did not receive their full third Economic Impact Payment will need their third payment amounts to figure and claim the 2021 Recovery Rebate Credit.
You should also keep end of year documents such as:
- Letter 6419, 2021 Total Advance Child Tax Credit Payments to reconcile advance child tax credit payments.
- Letter 6475, Your 2021 Economic Impact Payment, to determine eligibility to claim recovery rebate credit.
- Form 1095-A, Health Insurance Marketplace Statement, to reconcile advance premium tax credits for Marketplace coverage.
Confirm Mailing and Email Addresses and Report Name Changes
To be sure that you receive your tax forms on time, you should provide the IRS with a new mailing address or email address for each employer, bank, and other payers. You can notify the IRS of an address change by completing Form 8822, Change of Address, and returning it to the IRS. You should also tell your local post office to forward your mail. You should also notify the Social Security Administration of a legal name change.
View Account Information Online
If you have not set up your Online Account, it’s time to do so now. If you already have an Online Account, be sure to check it regularly for updates about your federal tax account. Taxpayers can use Online Account to securely access the latest available information about their federal tax account.
Review Proper Tax Withholding and Make Adjustments if Needed
Taxpayers who find themselves with a tax bill or an unexpectedly large refund in 2021 might consider adjusting how much tax their employer withholds from their paychecks. Completing a new Form W-4 can help individuals keep more money in each pay period and also avoid a large tax bill at the end of the year. Life changes – getting married or divorced, welcoming a child, or taking on a second job – may be reasons to change withholding.
You should make quarterly estimated tax payments if you receive a lot of non-wage income such as self-employment profits, investment income, taxable Social Security benefits, or pension and annuity income.
Tax Season Is Fast Approaching
Filing taxes is an inevitable aspect of our lives, and with the tax law becoming more complex with every passing year, there’s no better time to get ready than right now! But you can save yourself the trouble by having a professional do it for you! Send us a message today and we’ll discuss how we can make your tax reporting a breeze!
