Plan Now to Make Tax Filing in 2022 Easier!
The IRS recommends that taxpayers start to plan and prepare now to make tax filing easier in 2022. This includes anyone who received a stimulus payment or Advance Child Tax Credit payments. Getting prepared now will help taxpayers file an accurate return and avoid processing delays that could delay tax refunds.
The first step in this preparation process includes gathering and organizing all of your tax records for 2021. Compiling this information will help avoid filing errors or delays in processing, which could cause a delay in receiving any tax refund. The forms to collect include:
- Forms W-2 from employer(s)
- Forms 1099 from banks, issuing agencies, and other payers, including unemployment compensation, dividends, interest, distributions from a pension, annuity, or retirement plan
- Form 1099-K, 1099-MISC, 1099-NEC, or other income statements for workers in the gig economy
- Other income documents (such as brokerage statements) and records of virtual currency transactions
Taxpayers that received an Advance Child Tax Credit (ACTC) and/or Premium Tax Credit (PTC) or who received an Economic Impact Payment and would like to determine their eligibility for a Recovery Rebate Credit should have the following documents on hand as well:
- Letter 6419, 2021 Total Advance Child Tax Credit Payments, to reconcile advance Child Tax Credit payments
- Form 1095-A, Health Insurance Marketplace Statement, to reconcile advance Premium Tax Credits for Marketplace coverage
- Letter 6475, Your 2021 Economic Impact Payment, to determine eligibility to claim the Recovery Rebate Credit (RRC)
The IRS is mailing Letters 6419, 6475, and Form 1095-A to taxpayers, so if you have an address change, please make sure you have updated that with the IRS. If you do not receive or cannot locate your Letters 6419, 6475, or Form 1095-A, taxpayers can retrieve this information from their online account.
Regarding the online account mentioned above, the IRS recommends that taxpayers signup for an online account. Signing up for an online account with the IRS will allow taxpayers to:
- See the amount of their Economic Impact Payment (EIP), so they can accurately claim a RRC
- Have access to the Child Tax Credit Portal to see the payment dates and amounts paid
The information received through the online IRS account can be used by taxpayers to reconcile their ACTC payments with the Child Tax Credit they claim on their 2021 tax returns.
The IRS also recommends that taxpayers check their tax withholding if they received a large refund or owed taxes during the last tax year. If a taxpayer owed a large payment to the IRS, they might want to consider increasing their withholding or making estimated tax payments to avoid any underpayment penalties. In addition, if a taxpayer got married, divorced or had a child in 2021, it is essential to evaluate their withholding to determine how that could impact your tax payment or refund. To make any changes to withholding, taxpayers would need to complete a Form W-4 and provide that updated document to their employer(s).
Taxpayers that receive a substantial amount of non-wage income, such as self-employment income (including non-wage gig income), investment income, taxable Social Security benefits, or pension and annuity income, might consider making quarterly estimated tax payments or increase their wage withholding to cover this additional income. The last quarterly estimated tax payment for 2021 is due on January 18, 2022; payments can be made in the online IRS account or through IRS.gov/payments.
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