Year 2021 was challenging. There’s no doubt that navigating through the pandemic has been tough on everyone. If there’s anything that can be done to begin 2022 on a high note, why not make sure you are prepared for the 2021 tax season and ready to file your federal income tax return when the IRS officially starts accepting them on January 24? Here are a few things to look at to prepare for the next tax year.
- Login or create an online tax account with the IRS. Here you can find information regarding your tax records, making payments, updating personal information and observe information from your most recently filed tax return.
- Check your Individua Tax Identification Number (ITIN). Visit the IRS website for a list of ITINs with middle digits that have expired.
- Ensure you’ve withheld enough. Tax planning is for everyone and there is still time to change your withholding or make additional tax payments. You can use the Tax Withholding Estimator found on the IRS website to make sure you have the right amount of tax withheld from your paycheck.
- Consider direct deposit. The fastest way to get your tax refund is by electronically filing and selecting direct deposit. Eight out of ten taxpayers use direct deposit.
- Gather your tax documentation. Organization goes a long way when preparing tax returns. Important items to include are:
- Prior year tax return (Only if switching CPAs)
- Forms W-2 from your employer
- Forms 1099 – from financial institutions and other payers
- Form 1095-A
- Form 1099-NEC
Other crucial items to the 2022 tax filing year include:
- Any records of virtual currency transactions.
- Letter 6475 – Receipt of the third stimulus check ($1,400 per person and qualifying dependent) that hit bank accounts beginning March 12, 2021.
- Letter 6419 – 2021 Total Advance Child Tax Credit Payments. This will help your tax advisor reconcile your advance payments.
Given the nature of the pandemic, it’s important to understand tax refund timing. Refunds typically show up in less than 21 days, however some refunds may take longer due to the pandemic and IRS working to protect against fraud.
It’s never too early to contact your tax advisor for a consultation on how you can best approach the 2022 tax year filing season. Feel free to contact your Henry+Horne advisor. And remember, the IRS officially opens for individual filing on Monday!