Uh oh. Did you wait until the last minute to do your taxes again? That’s OK. We’ve got you. Just in time, here are some last-minute tax tips for 2022.
There are some moves you still have time to make, and you can use this post as a handy-dandy checklist to make sure you don’t miss anything.
The first tip is this — if you genuinely think you won't have your return ready by April 18, 2022, file for an extension now. Don’t wait. File IRS Form 4868 Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. Just remember, if you owe any taxes, you might need to pay some interest when your six extra months are up.
And now for the big reveal: last-minute tax tips for 2022.
Get Your Records and Forms Together
Even if you use an online tax preparation tool, you need all your supporting documents in front of you to streamline the process. Print out a checklist to help you remember all the required paperwork, much of which came in the mail in January. We hope you didn't throw anything out by accident, but if you did, you can usually get another copy. Here's what you need:
- W-2s, 1099s, pension plan statements, and IRA distribution paperwork
- Mortgage interest statement
- Tuition statement and student loan documentation
- Medical saving account contributions
- Energy-efficient home receipts
- Alimony paid
- Moving expenses
To take advantage of various credits and deductions, gather all those receipts you kept throughout the year, including:
- Education costs
- Childcare costs
- Investment interest expenses
- Adoption costs
- Medical and dental receipts
Put similar documents together. If you have plenty of each, put them in separate folders.
Call your broker. If you sold stocks in 2021, you must know your basis and any gains/losses you took. The same holds true for mutual funds, cryptocurrency, and other investments.
Get your rental income documents together, and don't assume so-called tax-free municipal bonds are completely free of taxes. Let your tax preparer help you determine that.
Did you receive advance child tax credits? The IRS mailed a form you need to show how much you received. Also, unemployment benefits are taxable for 2021, unlike 2020.
Reconcile any stimulus payments and recovery rebate credit if you received a third stimulus payment in 2021. The IRS should have mailed you Letter 6475 with the details. Check your tax transcript for details, too.
Knowing these things can help you decide whether or not to claim the Recovery Rebate Credit on your tax return. The RRC is only for taxpayers who still have not received the total amount of the stimulus due them from the previous three rounds of payment.
Get the Right Tax Forms
If you have complicated taxes, the library and post office might not have some of the specialized forms you require. Go to IRS.gov to search for the correct form and download it from there. You can have them mailed, but that takes time you might not have.
The IRS even helps you find the correct state and local tax forms and publications. (Not everyone lives or works in a state with no income tax.)
Itemize
Yes, the standard deduction is much bigger than it used to be, but it makes sense to add up an itemization list. You might be surprised to find it even bigger than the standard deduction, especially if you are self-employed, own a home, or live in a high-tax area.
The 2021 standard deduction is $12,550 for most single filers and $25,100 for most of you that are married and filing jointly.
Look here to determine whether to itemize:
- Charitable donations
- Mortgage interest paid
- Medical and dental expenses
- The Earned Income Credit
Charitable donations are capped at $300 for singles and $600 for married, filing jointly. However, for 2021 only, you can claim a deduction of up to 100% of your adjusted gross income if you made a qualifying donation of that size. The contributions must have gone to a qualifying charity. Also, check for qualified expenses, and itemize if they add up to more than the standard deduction.
If your medical and dental expenses add up to more than 7.5% of your adjusted gross income for 2021, you can deduct it from your taxes. If you earned less than $57,414 and worked in 2021, you could be eligible for the Earned Income Tax Credit.
The Gig Economy, Estimated Tax Payments, and Home Office Deduction
Anything you earned working for the gig economy counts as income. Sorry, you need to pay taxes on it. Include anything you made using your car to deliver food, doing doggie daycare at your home, renting a parking space, or anything similar; you must report the income and pay taxes. Paying estimated quarterly taxes can eliminate some of the worries of a big tax bill at the end of the year. Also, in many circumstances, the IRS requires it.
If you worked as a contractor, you might need to file Schedule C, Profit or Loss from Business. If you are self-employed, you might be able to deduct some car or home office expenses, like the Home Office Deduction.
Top Up Your Retirement Plans
If you haven't fully funded your retirement accounts, you have through April 15 to complete the funding. The maximum contribution for 2021 is $6,000 if you are under 50 and $7,000 if you are over 50 by the end of the year. Go here to find out more details.
Final Tips
- File on time and pay on time. Otherwise, you pay penalties and interest. File for an extension if you need to.
- File electronically. Not only is it more secure, but it's also faster than sending a paper return.
- Start your 2022 tax planning.
If you owe taxes, you can still e-file, then send a check postmarked by tax day. Or you can pay direct debit or use a credit card. If you go with a credit card, you will pay the service charges, up to 2.5% of the total charged.
The top tax planning considerations for 2022 include debt restructuring, international planning, local and state tax changes, pass-through tax compliance, and estate and gift tax opportunities.
Final, Final Tip
Have questions about your tax situation? Do you owe money from previous years? Contact Top Tax Defenders. Even at this late date, we are ready to help you take care of any tax problem. But hurry, time is running out!
