Income tax time is near: Here are some tips to get you started for the 2022 tax season
With tax time around the corner, and W-2's soon to arrive if they haven't already, it's important to know how to properly file and what to do to lower your taxes, save money and avoid penalties.
The deadline to file 2021 income tax returns is Monday, April 18 for most people. W-2's are due to be mailed no later than Jan. 31.
Here are some practical tips from the Internal Revenue Service and others to guide you help you hit the ground running this tax season.
Tax filing step 1: Gather all year-end income documents
It's important for people to have all of the necessary documents before preparing their tax return, according to the Department of Internal Revenue. The IRS released a list of forms that taxpayers need to have before they begin doing their taxes.
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Social Security numbers of everyone listed on the tax return. Many taxpayers have these numbers memorized. Still, it's a good idea to have them on hand to double check that the numbers on the tax return are correct. An SSN with one number wrong or two numbers switched will cause processing delays.
Bank account and routing numbers. People will need these for direct deposit refunds. Direct deposits is the fastest way for taxpayers to get their money and avoids a check getting lost, stolen or returned to IRS as undeliverable.
Don't have a bank account? Learn how to open an account at an FDIC-insured bank or through the National Credit Union locator. Veterans can access the Veterans Benefit Banking Program.
Forms W-2 from employer(s).
Forms 1099 from banks, issuing agencies and other payers including unemployment compensations, dividends, distributions from a pension, annuity or retirement plan.
Forms 1099-K, 1099-MISC, W-2 or other income statement for workers in the gig economy.
Form 1099-INT for interest received.
Other income documents and records of virtual currency transactions.
Form 1095-A, Health Insurance Marketplace Statement. Taxpayers will need this form to reconcile advance payments or claim the premium tax credits.
Letter 6419, 2021 Total Advance Child Tax Payments, to reconcile advance tax credit payments.
Letter 6475, Your 2021 Economic Impact Payment, to determine eligibility to claim the Recovery Rebate Credit.
Itemize tax deductions
Though it's easier to take the standard deduction, Turbo Tax website said you may save a lot of money if you itemize, especially if you are self-employed, own a home or live in a high-tax area. Itemizing is worth it when your qualified expenses add up to more than the 2021 standard deduction of $12,550 for most singles and $25,000 for most married couples filing jointly.
"Many deductions are well known, such as those for mortgage interest and charitable donations," the website said. "You can also deduct the portion of medical expenses that exceed 7.5% of your adjusted gross income for 2021."
File and pay on time
If you can't finish your return on time, make sure you file Form 4868 by April 18, according to Turbo Tax. The form gives you an extension of the filing deadline until Oct. 27. On the form, taxpayers need to make a reasonable estimate of their tax liability for 2021 and when they will pay any existing balance due with their request. The website said requesting an extension in a timely manner is especially important if you end up owing taxes to the IRS.
File electronically
Electronic filing works best if you expect a tax refund, Turbo Tax said, because the IRS processes electronic returns faster than paper ones. You can expect to get your refund three to six weeks earlier. If you have your refund deposited directly into your bank account or IRA, the waiting time is even less.
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This article originally appeared on Monroe News-Star: Here's what you should know before filing your 2021 income taxes
