How to Make Filing Taxes Easy in 2022
It may seem like you just finished with last year’s tax return, but here we go again!
With January 1 coming up quick, now is a good time to start getting things together so you’re not scrambling to meet the 2021 tax deadline at the last minute.
The IRS is on your side providing helpful tips that will help you stay organized. Here is what they are recommending.
Gather and Organize All Tax Documents
At the beginning of the year, you will receive tax documents from your employers and clients. It’s best to file these in an organized fashion as soon as you get them, so you have them ready to submit to your tax prep expert. You should be looking out for:
- W2’s from your employer
- 1099’s from banks and issuing agencies
- 1099-K’s, 1099-MISC and W-2’s from employers and clients if you freelance
- 1099-INT for interest received
- Other income documents including proof of virtual currency transactions
You should also keep track of any supporting documents concerning income.
Other documents to present include those concerning credits and deductions. Taxpayers that need to reconcile advance payments of child tax credits and premium tax credits will need their information from the previous year. Those that did not receive an Economic Impact Payment will need their third payment amounts to determine what they can claim.
Other year end documents that should be held on to include:
- Letter 6419, 2021 Total Advance Child Tax Payment Credits which will help reconcile advance child tax payments
- Letter 6475, your Economic Impact Payment that you can use to determine your eligibility to claim a recovery rebate credit
- Form 1095-A, which proves you have health insurance and can be used to reconcile advance tax credits for coverage
Confirm Your Personal and Professional Information
To ensure that you get all your tax information on time, update all banks, employers and the IRS on any name or address changes that happened in the past year. You can complete Form 8822, Change of Address and send it to the IRS to make sure the organization is the loop.
You can also go online to update your address at USPS.com. This will ensure that any mail going to the wrong address gets forwarded.
If you had a legal name change, notify the Social Security Administration.
Set Up Your IRS Account
An online account will allow you to access the latest information about your federal tax account. If you don’t have an account, now is a good time to set one up. If you have an account, make sure you can still log in. Update your password if necessary.
Review Your Withholding
The W-4 form you fill out for your employer will dictate how much money is taken from your paycheck each month. While some people think it’s best to get as little money taken out as possible, going this route will result in high tax bills at the end of the year. Check with your employer to find out what you have on file and make adjustments as needed.
Make Estimated Tax Payments
If you work in the gig economy, you may be looking at a big tax bill. Freelancers and independent contractors are responsible for paying their own social security and Medicare benefits and these can add up at the end of the year.
To keep costs from getting out of hand, you may consider making estimated payments throughout the year. This will keep you from paying off an expensive bill off all at once. If you are not making estimated tax payments, talk to your tax prep expert about setting them up.
Renew Your ITIN if Necessary
Individual Taxpayer Identification Numbers (ITINs) are tax processing numbers used for people who are not eligible for social security numbers. These may have expired if they were not included at least once in the 2018, 2019 and 2020 tax years’ returns.
ITINs with middle digits 70 through 88 and those with middle digits 90 through 99 assigned before 2013 have also expired.
If your ITIN has expired, be sure to renew it in time for tax season.
Set Up Direct Deposit
Direct deposit is the fastest and most reliable way to get your tax refund. If you don’t have direct deposit, have your tax preparer set it up for you. If you do your own taxes, you can select it as a refund option when filling out your return.
If you are familiar with tax law, consider volunteering. Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) provide free tax preparation for eligible taxpayers. They are currently looking for additional volunteers to assist their causes.
Now that you know what to do to get ready for tax season, you have no excuse to miss the deadlines. Here’s hoping you get a big refund this year.