JUST WHEN YOU THOUGHT ‘TIS THE SEASON’ 2021 GREETINGS WERE OVER
‘Tis Tax Season 2022 … So, Time to Get Ready!
In this article, you’ll learn how to best comply with this year’s annual tax filing event with a minimum of frustration and effort. Whether you choose a do-it-yourself (DIY) approach or engage the expert advice of a tax preparation professional, here are 5 critical items to complete your 2021 tax return in a timely manner.
1. Timing is Key
The IRS started accepting 2021 tax returns on January 24, 2022. To revisit a history of last filing season, the IRS had a huge inventory of tax returns waiting to be processed. The pandemic was and is a factor in delays in processing … coupled with the need to manually process more than 10 million electronically filed returns that contained errors. As of December 2021, the IRS remained backlogged with 9.3 million returns.
Lesson: A sense of urgency to file early is desirable to avoid delays in your 2021 return being processed and the potential for a wait on tax refunds you are due. Whether you intend to be a self-preparer in 2022 or not, it’s a good idea to prepare for the tax season sooner rather than later. To better understand your individual situation, consider contacting a tax professional to answer your specific questions.
2. Organize Your Paperwork
Be sure to have all your 2021 tax information in hand before filing. That way you, your tax-preparer and the IRS will avoid processing delays that could stall your receipt of a tax refund.
Here’s a list of common documents you may need to file your taxes:
- W-2s from employers
- 1099s from anyone who paid you miscellaneous, contract, or other relevant funds
- Documents showing medical, educational, childcare, or other expenses, especially if you’re itemizing
- Statements regarding investments or mortgage interest payments
- Receipts for itemized expense deductions.
- Deductible charitable donations over $300 for individual filers; $600 for married couples filing jointly.
- Advance Child Tax Credit payments
- Recovery Rebate Credit (stimulus payment)
- Unemployment compensation
- Health Insurance Marketplace Statements
- State tax refund
- Retirement plan contributions and distributions
- Health Savings Account contributions
The above is not a complete list of tax filing documents you may need to deal with. Additionally, there are limitations and exclusions on many. Again, engaging a tax professional may save you hours of research and preparation time while better ensuring accuracy in filing your return.
3. Dependent Information
Assemble the names and Social Security numbers of all dependents you claim on your tax return. Note: Only one taxpayer may claim the same child as a dependent in the same tax year. For example, if you’re divorced, work with your ‘ex’ to agree on which parent will claim a child or children for the 2021 tax year.
4. Expedite Your Filing & Tax Refund
The filing deadline to submit 2021 tax returns or an extension to file and pay tax owed is Monday, April 18, 2022, for most taxpayers. Electronic filing and direct deposit are the way to go for the fastest refund. Filing electronically with direct deposit and avoiding a paper tax return is more important than ever this year to avoid refund delays. For optimal tax return processing, do not file on paper – use software, a trusted tax professional or Free File on IRS.gov. For people with an error-free tax return, the IRS anticipates most taxpayers will receive their refund within 21 days of when they file electronically and choose direct deposit.
5. Need More Time?
Clearly, there’s a lot that goes into preparing to file your return. If you are running out of time or have not gathered all the information you will need, you can file an extension for your return. This gives you an additional six-month window for filing your federal tax return … until Monday, October 17, 2022. to file. Note: An extension doesn’t apply to your tax payment. If you wait until later to pay your taxes, you might still owe penalties and interest.
Don’t feel like you can handle the job on your own? Engage a tax professional. You’ll likely save time and frustration … plus accelerate your refund and minimize your tax bite.
Have Immediate Questions or Concerns!
Pearson & Co stand ready to help as needed. A phone call or email is all it takes. We’ll respond promptly.
