|This tax year will be another complex year as many taxpayers received stimulus payments or advance Child Tax Credit payments and will need to take steps now to make filing their tax returns easier in 2022.
Planning will help ensure you are able to file an accurate return and avoid any delays with the IRS processing your return or refund.
Here some steps that you can take now:
Gather and organize tax records. Collecting and organizing all necessary documents and information will help you to avoid filing errors that lead to processing and refund delays. A list of important tax forms that you should be gathering can be found here.
It is especially important that you also keep record of any virtual currency transactions for any purchases, sales, trades, or exchanges of digital assets such as Bitcoin, Ethereum, Litecoin, etc.
In addition, if you also received an Advance Child Tax Credit (ACTC) and/or Premium Tax Credit (PTC) or an Economic Impact Payment and want to determine your eligibility for a Recovery Rebate Credit, should also keep the following documents on hand:
Letter 6419, 2021 Total Advance Child Tax Credit Payments, to reconcile advance Child Tax Credit payments,
Form 1095-A, Health Insurance Marketplace Statement, to reconcile advance Premium Tax Credits for Marketplace coverage, and
Letter 6475, Your 2021 Economic Impact Payment, to determine eligibility to claim the Recovery Rebate Credit.
The IRS will mail Letters 6419, 6475 and Form 1095-A to you, so be sure to notify the IRS of any change of address.
If you don’t receive, or can’t find your Letters 6419, 6475 or Form 1095-A, you can can retrieve the information on these letters using your online account.
Check tax withholding and/or estimated payments. Finally, we recommend that you check your tax withholding if you owed taxes or received a large refund last year. If you owed taxes last year, you might want to consider having additional amounts withheld or making estimated tax payments to avoid an underpayment penalty. This is especially important if you got married or divorced, had a child, or took on a second job.
You may also need to consider if you need to make estimated tax payment. If you received a substantial amount of non-wage income, such as self-employment income (including non-wage gig income), investment income, taxable Social Security benefits or pension and annuity income, you should make quarterly estimated tax payments or increase your wage withholding to cover the taxes on this type of income.
Please contact our office if you’d like for us to prepare an analysis of projected taxable income and related tax liability.
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