Are You Ready to File Your 2022 Tax Return?

No? We know … not your favorite thing to do! Most of the population falls into that category. We’ve put together a list of items that will help as you gather the right information and consider your options for filing your 2022 tax return.

Gathering Your Documents

When filers have all their tax documentation gathered and organized, they’re in the best position to file an accurate return and avoid processing or refund delays or receiving IRS letters. Now’s a good time for taxpayers to consider financial transactions that occurred in 2022, if they’re taxable, and how they should be reported. As taxpayers gather tax records, they should remember that most income is taxable. This includes unemployment income, refund interest and income from the gig economy, and digital assets, including from part-time work, side jobs or the sale of goods. The American Rescue Plan Act of 2021 lowered the reporting threshold for third-party networks that process payments for those doing business. Now a single transaction exceeding $600 can trigger a 1099-K.

Typically, year-end forms start arriving by mail or are available online in mid-to-late January. Review them for accuracy and contact the issuer to correct information if needed. If you are our client, documents can be gathered and shared through our secure portal.

If your documents don’t arrive on time, or you foresee a situation where you won’t be able to meet the March 15th deadline for company tax returns or April 18th deadline for individual tax returns, it may make sense to request an extension for your 2022 taxes. Please note, however, there is no extension for tax payment. Estimated taxes are still required to be paid on time.

Consider Your Deductible Contributions

If you haven’t met your contribution limit for 2022, consider contributing to traditional or Roth IRA to reduce your tax liability. For self-employed individuals, SEP contributions may also be an option. The HSA contribution deadline for 2022 is also April 18, 2023. 529 plan contributions can also help reduce state tax liability.

What’s New for Tax Year 2022

Credit amounts also change each year … such as the Child Tax Credit (CTC), Earned Income Tax Credit (EITC) and Dependent Care Credit. Some taxpayers may qualify this year for the expanded eligibility for the Premium Tax Credit, while others may qualify for a Clean Vehicle Credit through the Inflation Reduction Act of 2022.

Refunds may be smaller in 2023. Taxpayers will not receive an additional stimulus payment with a 2023 tax refund because there were no Economic Impact Payments for 2022. In addition, taxpayers who don’t itemize and take the standard deduction, won’t be able to deduct their charitable contributions

Renew Expiring Tax ID Numbers

Taxpayers should ensure their Individual Tax Identification Number (ITIN) has not expired before filing a 2022 tax return. Those who need to file a tax return, should submit a Form W-7, Application for IRS Individual Taxpayer Identification Number now, to renew their ITIN. Taxpayers who fail to renew an ITIN could face a delayed refund and may be ineligible for certain tax credits. Applying now will help avoid the rush as well as refund and processing delays in 2023.

Get Your Refund Faster with Direct Deposit

Filing electronically and choosing Direct Deposit for tax refund is the fastest and safest way to file and get a refund. Even when filing a paper return, choosing a direct deposit refund can save a lot of time!

Be sure to consult with your tax professional to analyze your specific tax situation. At Taxperts, we can assess your small business structure and suggest ways to increase your savings. Check out our website, Facebook page, or LinkedIn page to learn more.

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