2022 Tax Checklist

When holiday season comes to an end, tax season is in full swing and whether you hire a professional or D.I.Y., you’ll need certain documents and information to prepare. Here’s a quick tax prep checklist for you to reference while getting your tax return started:

Personal Information

  • Last Year’s Taxes: Having both your Federal and – if applicable – State returns. These will help guide you to remember what you filed last year, and which documents you’ll need.

  • Social Security and/or Tax ID Numbers: Have these ID numbers ready for yourself, your spouse, and any/all dependents (Remember: dependents may include children, elderly parents, and others).

  • Identity Protection (IP) Pin: If you, your spouse, or your dependents have been issued an IP Pin, you’ll want to have it ready.

Income

  • W-2 Forms: Employers must issue or mail your W2 forms by January 31st , be sure to pay attention to your physical and electronic mailboxes in the upcoming weeks for these important documents.

  • 1099 Forms: Anticipate receiving these between January 31st and early March. 1099s are records that detail any additional income you’ve received throughout the year. There are a multitude of 1099 form types, each differs by the type of payment you received.

    • Some Examples:

      • 1099-NEC: For contract work

      • 1099-K: For those paid via a third-party such as PayPal or Venmo.

      • 1099-INT: For interest earnings on investments

        1099-DIV: For dividend earnings on investments

Deduction Opportunities

                What is a Tax Deduction?

A tax deduction reduces your taxable income, which usually means a lower tax bill. The key to claiming these deductions is documentation. Documenting what you claim each year will help guide you through future tax returns and will protect you in the unfortunate case of an audit.

                Some Deduction Examples:

  • Retirement Account Contributions: Contributions to a Traditional IRA or self-employed retirement account can generally be deductible, just ensure that you do not exceed the contribution limits.

  • Educational Expenses: Students are able to claim a deduction for tuition and fees they paid, as well as for interest paid on student loans. Keep in mind that the IRS will not accept your deduction claim without Form 1098-T, which show your education transactions. Form 1098-E will have details on your student loans.

  • Property Taxes & Mortgage Interest: Your mortgage payment may include an amount escrowed for property taxes, which will be included on the Form 1098 your lender sends to you. This document will also indicate how much home loan interest you can claim on IRS Form Schedule A.

  • Charitable Donations: Keep your receipts for charitable donations to ensure your generosity is accounted for come tax time.

  • Classroom Expenses: Are you a teacher or other eligible educator? You can deduct up to $300 spent on classroom supplies.

Credit Opportunities

                What is a Tax Credit?

Tax Credits provide dollar-for-dollar reductions in any tax you owe. Think of them as the most valuable ally of the tax deduction. And in the same way you must have evidence to claim deductions, you’ll need evidence to claim credits.

Some Credit Examples:

  • American Opportunity & Lifetime Learning Credits: These are education related credits that can save you quite a bit come tax time. The evidence of your education expenses is shown on Form 1098T.

  • Child Tax Credit: The standard child tax credit in 2022 is worth up to $2,000 per child. If you’ve added to your family through adoption, you may be eligible for further tax credits.

  • Retirement Savings Contributions Credit (AKA Saver’s Credit): Contributions to your 401k or similar employer-sponsored qualified plan might allow you to claim this credit.

Samantha McKeeComment