TAX SEASON 2022 – Are You Ready?

Thursday, February 17, 2022 – At LSWG we are putting on the coffee and gearing up for another tax season. Are you ready?

The 2022 IRS deadline for filing individual income tax returns is Monday, April 18, 2022.  As we previously announced, the Maryland deadline for filing (and paying) State income taxes has been extended to July 15, 2022, for individual filers.

Regardless of when it might end, tax season has begun.  LSWG clients can access their tax organizer and upload tax forms and information via their personal client portal. If you are ready to get your tax return started, we recommend you start collecting the documents you will need now, including:

• Forms W-2. Each employer you worked for must send this to you.
• Forms 1099 from banks, issuing agencies and other payers including unemployment compensation, dividends, and distributions from a pension, annuity or retirement plan.
• Form 1099-K, 1099-MISC, W-2 or another income statement for workers in the gig economy. Note especially the new Form 1099-NEC, used for freelancers.
• Form 1099-INT for interest received.
• Other income documents and records of virtual currency transactions.

Taxpayers should also gather any documents from these types of earnings and keep copies of tax returns and all supporting documents for at least three years, advises the IRS.

These documents are about more than checking boxes. Income documents can help you determine whether you’re eligible for deductions or credits. For example, people who need to reconcile their advance payments of the child tax credit and premium tax credit will need their related 2021 information.

Other documents you may need include:

• Letter 6419, 2021 Total Advance Child Tax Credit Payments, to reconcile advance child tax credit payments.
• Letter 6475, Your 2021 Economic Impact Payment, to determine eligibility to claim the recovery rebate credit.
• Form 1095-A, Health Insurance Marketplace Statement, to reconcile advance premium tax credits for marketplace coverage.

Tidy up other areas

In addition to gathering papers, now is a good time to confirm mailing and email addresses and report name changes. Make sure that each employer, bank and other payer has your current mailing address or email address.

You can report address changes by completing Form 8822, Change of Address, and sending it to the IRS. If you have moved, you should also notify the postal service to forward your mail by going online at USPS.com or visiting your local post office. Also, notify the Social Security Administration of a legal name change.

Review proper tax withholding

Taxpayers may want to consider adjusting their withholding if they owed taxes or received a large refund in 2021. Changing withholding can help individuals avoid a tax bill or let them keep more money each payday. Life changes — getting married or divorced, welcoming a child or taking on a second job — may also be reasons to change withholding. Taxpayers might think about completing a new Form W-4, Employee’s Withholding Certificate, each year and when personal or financial situations change. Also, you may want to fill out an equivalent state withholding form, depending on where you live.

If you received a substantial amount of non-wage income like self-employment income, investment income, taxable Social Security benefits and, in some instances, pension and annuity income, you should make quarterly estimated tax payments.

Work with your tax advisor so when you sit down to go over your return, everything proceeds as smoothly as possible.