For the average filer, taxes can be confusing. Every year there seem to be more and more complex regulations. Here are some things to keep in mind to make the most of this year’s filing:
1. File early and accurately.
So many details associated with filing taxes are outside of a filer’s control, which is why you should prepare early and file a return that goes through without delay, accessing all the deductions and credits that can reduce tax liability and boost refund sizes. Specifically, make sure that you keep track of any correspondence received from the IRS because certain letters (detailed below) will contain documentation needed to accurately file a 2021 return that avoids disputes and delays.
To get started, contact H+S Accounting Tax today.
2. Filing a 2021 tax return, even if you don’t have to, could put money in your pocket.
While people with income under a certain amount aren’t generally required to file a tax return, those who qualify for certain tax credits or already paid some federal income tax by having taxes withheld from a paycheck may qualify for a tax refund available only by filing a return.
3. Organize your records.
Good organization could be the difference between owing money to the IRS and getting a refund on your taxes.
How should you start organizing?
- Retrieve all mail received in January 2002, such as W-2s, 1099s and mortgage interest statements. Take special care not to discard any tax-related documents, even if they may not seem very important.
- Collect receipts, records of charitable donations, and relevant expense information that you have saved during 2021.
- Create groups of similar documents by filing them in different folders.
- Determine the price you paid for any stocks, bonds, funds, or cryptocurrency that you have sold. If you don’t know, contact your broker before you start to prepare your tax return.
- Know the details on income from rental properties. Don’t assume that your tax-free municipal bonds are completely free of taxes. Having this type of information at your fingertips will save you another trip through your files.
We can help you make sense of taxes; contact H+S Accounting Tax today.
4. Claim a Recovery Rebate Credit if you were skipped.
The IRS has disbursed three rounds of Economic Impact Payments to eligible Americans since the onset of the coronavirus pandemic, and the third and final round was distributed in 2021. Filers who received that third payment will receive Letter 6475 detailing how much was received, and that total will need to be reported on your return.
Individuals who didn’t qualify for a third Economic Impact Payment, or got less than the full amount, may be eligible to claim the 2021 recovery rebate credit based on their 2021 tax year information,” the IRS stated.
5. Take advantage of the Earned Income Tax Credit.
The American Rescue Plan tripled the maximum EITC available to $1,502. For the first – and only – time, both low- and moderate-income filers who do not have qualifying children may be eligible.
The EITC pool expansion means that childless workers as young as 19 years of age, as well as those aged 65 and older, are eligible for the EITC in 2021 if they meet income requirements. To qualify for the credit, earned 2021 income must be below $21,430 for an individual or $27,380 if married filing jointly.
To learn more about how to maximize your 2022 refunds, contact H+S Accounting Tax today.