2022 Tax Season Tips

2022 Tax Season Tips

Stress-free guide to 2022 taxes

Taxes can be a stressful time for both you as a taxpayer and those you hire to prepare them.  We would like to give you some tips to help make it as smooth as possible.

Documents needed: If you have been with a tax preparer for a few years, you will not need as many documents as you did for the first year.  Here are some of the documents that all tax preparers need: 

1. Any paperwork received that has a number on it.  Most people know W2s or 1099s are important but so are those papers that have any number on it, such as a 1095, 1098, or 5498. 
2. If you have a business, rentals, side job or gig job, pull any receipts associated with earning money. This may include bank statements, credit card statements, or actual receipts.  You may also make a list of these expenses.  Expenses for these types of income include but are not limited to:
   1. Car/Truck expenses
   2. Supplies for the jobs
   3. Labor you paid for
   4. Rent on any space or equipment
   5. Parking & tolls 
   6. Insurances for performing these duties
   7. Licensing for performing these duties

1. Preparing a statement that explains changes that have happened in the tax year is very helpful and can help prevent errors or misunderstandings. This would include new family members such as spouses or children or if you had large medical expenses or had to pull money out of a retirement plan. 
2. If you have received any paperwork from the IRS or State agency in the tax year.  This is helpful to identify any ongoing issues with the agencies.

Here are some things you will need to remember to help lower your own stress:  

1. Patience is the key – You need to have patience when dealing with the IRS or Tax agencies.  This includes having patience with your tax preparer.  This is the busiest time of the year for most accountants/tax preparers.  No matter who you have doing your taxes, they will get to you in time.
2. Know the Calendar – If you know when things happen and keep them in mind, it will lower your stress. 
   1. January 3, 2023 – First Day to file with the IRS.  HOWEVER, THEY WILL NOT NORMALLY START ACCEPTING FILINGS UNTIL JANUARY 23, 2023.
   2. January 17, 2023 – Last date to pay estimated taxes to the IRS or State.
   3. February 1, 2023 – All 1099s and W2s must be in the mail by this day to the recipient.
   4. March 15, 2023 – Tax returns are due for all S Corporations and Partnerships.  If you are not able to file by this date, you can file for a 6-month extension.
   5. April 18, 2023 – DEADLINE FOR ALL PERSONAL RETURNS.  You can file a 6-month extension but if you OWE money, YOU MUST STILL PAY BY THIS DAY.
   6. September 18, 2023 – All extended S-Corp & Partnership returns are due.
   7. October 18, 2023 – All extended Personal returns are due.
   8. November 15, 2023 – IRS “closes” accepting any e-filed returns to calibrate their system for the next tax year.
3. Know the Numbers – If you know what numbers are important, it can reassure you.
   1. In 2020, the government increased the child tax credit and the earned income tax credit but only for 2021 tax year.  Covid relief is over. This means reduced credits for the majority of those with children & lower income filers.  
      1. Child tax credit for 2021 = $2,000 per child under the age of 17.
      2. Child & Dependent Care Credit = $2,100 max credit
      3. Earned Income Tax Credit = $560 max credit
   2. The 2022 tax brackets have been adjusted.  This may mean that you are now in a higher tax bracket.  This becomes important if you have not changed your W4 with your employer.  In the past, a good rule of thumb was that your federal tax withholding should be about 10% of your gross income and 5% was good for state withholding.  Unfortunately, that is no longer the case.  The higher your gross income is, the more likely you will be in a higher tax bracket.  
4. Prepare for the future – After your taxes have been completed, make an appointment with your tax preparer to see what changes can be done to lower your tax liabilities for the next tax year. 
   1. Items to think about include changing your company’s filing status, changing your withholdings, increasing deductions to IRAs or health savings plans, increasing expenses, or paying into the system throughout the year.

Finances are always going to be a little bit stressful.  Anything that is important to us usually is but knowing these things can and will help you.  We at MDA Taxes are here to help reduce that stress.