How You Can Prepare for Tax Season 2022
Tax season is often loathed by most Americans. It’s thought of as a hassle and no one wants to go through the uptight lines and segments of a Form 1040.
It does not have to be a hassle though if you know how to prepare for tax season in 2022.
Why It's Important to File Tax
If you’re earning above $400 and self-employed or if your earned income as an employee goes above $12,000 then you are required to file a tax return.
In any case, filing taxes is necessary to avoid penalties and to save money on what might become IRS charges.
The IRS can track you down if you’re hoarding huge sums of money and failing to report them.
To save time and money then, staying on top of taxes is vital, and there are certain steps you can take to do that so tax season 2022 won't have to be that daunting.
What Documents You Need
If you want the raw calculations to be included in your tax returns, then it’s a good idea to keep your pay stubs every time you make a paycheck.
You may also need pay stubs if your employer fails to give you a W-2.
These are issued by your employer at the end of every tax season to show how much income taxes to withhold.
If your employer has not issued this yet, you must ask them for your W-2 and if they are adamant about not giving you one, you may also contact the IRS for help.
Recommended Reading: What Happens if you don’t file a W-2
Also Related: How to File Taxes without a W-2
These tax forms are for self-employed individual tax returns.
If you have your W-2’s, you use the information on that form to help fill in your Form 1040.
Recommended Reading: Form 1040, What it Is and How it Works
1099’s are used to report nonemployment income or payments made to you.
These may include rent for property owners, corporate stocks or interest income, and sometimes dividends, (form 1099-div).
Form 1040 is for people who file individual tax returns while Form 1099 is for those who earn other forms of income other than a salary.
Recommended Reading: How to File your 1099’s much Faster
How to File Taxes Efficiently
Save each and every tax form you get
If you want to make sure your W-2’s and 1040’s don't get mixed in with receipts and other papers, then designate a special place for them.
Put them into folders! Color code your folders if you have to.
This way you know when to retrieve a specific tax form when it’s time to file taxes.
Increase your contributions to retirement plans
If you want a reduced tax burden, then you may increase your tax contributions such as your 401k.
These payments only get taxed if you withdraw them.
For 2021, the contribution limits cap at $19, 500 and an additional $6,500 for catch-up remittances if you’re over 50 or older.
Contribute to your Roth or Traditional IRA.
If you’re thinking about contributing or opening up a traditional or Roth IRA, then the coverage period is the following tax year up until April 18, in the case of 2022.
You can still make contributions prior to filing your taxes.
Account for changes in your filing status
Have you gotten married? Did you have a child? Or has your child been emancipated therefore no longer standing as a dependent?
These changes will affect your tax status and it’s important to account for these personal events so that you can take full advantage of what is yours in tax season.
Tax Refund Delay Concerns
Check your returns for errors
A lot of the reasons refunds get delayed is because of errors.
The IRS isn’t perfect but you don’t gain anything either from failing to proofread your returns.
Often, the IRS can be proactive enough though such as in sending Letter 6419 or Letter 6575 for child tax credit and stimulus checks respectively.
Oversee your quarterly estimated payments
You must make sure that you aren’t missing any paperwork.
You can download a transcript from the IRS to verify your numbers from the last year.
You can also use the transcript to cross-check the payments from your child's tax credit.
If you claim your earned income tax credit, for example, you can expect your return in early March.
Update your contact information and status
If you’ve had some life changes as we discussed above, then update your IRS statuses.
That will avoid confusion when it comes time to file taxes.
And it will give you much more leverage if you do it ahead of tax season.
Create your own pay stubs
If you have other sources of income you will need to file those on your 1040 and 1099’s.
You can track your income and your gross pay by generating a pay stub.
The amounts you show on your pay stubs will then be used to reflect your income tax returns.