Jump Start Your 2022 Tax Filings
As 2022 winds down and we take time to enjoy the holiday season with family and friends, the last thing any of us want to think about is filing our 2022 tax returns. However, the best time to start tax planning is always now, and an effective tax plan can lead to a smoother filing process and potentially more money in our pockets.
Below is a list of small steps to take to help keep your tax planning efficient and free from your mind this holiday season.
Make sure you have withheld enough tax this year
Many people pay their taxes each year via withholdings from their paychecks each pay cycle. This withholding is calculated from information you provide to your employer on the W-4 form. This information should be reviewed on an annual basis at minimum to ensure that enough tax is being withheld from each pay check. Income from side jobs, self-employment, and investments are common forms of income that are not normally accounted for on this form. A quick way to determine if enough tax is being withheld is by using the free IRS Tax Withholding Estimator.
If you determine that you may owe additional taxes, you may need to make quarterly estimated tax payments. The final estimated payments for 2022 are due on January 17, 2023. Any tax liability not paid by this date may result in penalties and interest being owed on top of the tax liability.
Reach out by clicking the “Get Started” button below if you would like help calculating your estimated tax liability and filing tax payments before the January 17, 2023 deadline.
Be on the lookout for your tax records
Tax records that are organized and complete help ensure that an accurate tax return is filed on a timely basis resulting in a potential refund arriving quicker and a reduced change of potential deductions and credits being missed. The tax records you should be on the lookout for this year include:
Forms W-2 from your employer(s)
Forms 1099 from banks, issuing agencies and other payers including unemployment compensation, dividends, pension, annuity or retirement plan distributions
Forms 1099-K and 1099-MISC from side jobs and self-employment
Form 1099-INT if you were paid interest
Form 1095 for your health insurance in place during the year
Any IRS or other agency letters
CP01A Notice with your new Identity Protection PIN
Make sure any 1099-K’s received are accurate
Effective January 1, 2022, all third-party payment platforms (Venmo, PayPal, Stripe, etc.) are required to issue their users a 1099-K when payments received for goods or services during the year exceeded $600. Money received as a gift or reimbursement for an expense such as rent, utility bills, meals, etc. should not be reported on the 1099-K as income. If the information on the 1099-K is incorrect the IRS recommends that you contact the payer immediately. Keep a copy of all correspondence with the payer for your records. If you cannot get the form corrected, you may attach an explanation of the error to your tax return and report your income correctly.
Having confidence in the amount of tax you paid this year, knowing what tax records you should expect to receive, and making sure your tax records are accurate will help you free your mind of tax worries and fill it with joy this holiday season. Of course, if you have any questions with any of the items above, reach out to us and we will help you to be confident in your tax plan for the 2022 filings.
Happy Holidays!