How To Prep for the 2022 Tax Season

Tax season can be a stressful time for many people – making sure all of your financial records are in order can take up a great deal of your time. Plus, tax codes change on a regular basis no matter where you live. In addition to federal tax laws, there’s also your state tax laws that require your attention.

 

Tax preparation for 2022 will also be greatly affected by COVID-19. The pandemic has caused major ripples in the economy and the workforce. People have been leaving their regular jobs due to layoffs and furloughs and found alternative income sources.

 

These new income streams can come from temporary jobs like waiting tables or bartending, along with opening small businesses that operate from within a home. The federal government has also stepped in to help, issuing tax credits for children, special unemployment benefits and financial assistance for food, housing and bills.

 

All of these factors can cause further confusion and anxiety, and while the IRS and similar agencies have fallen behind in regard to audits and investigations into tax filings, they are beginning to catch up to the extreme volume, and reaching out to citizens who may owe additional taxes or filed incorrectly.

 

What To Do

When you’re preparing for filing taxes – regardless of the current situation – the key is to organize yourself. Having all of your information in front of you is an excellent starting point. It’s also a good idea to gather any correspondence from the government that you received. Finally, making a list of the past year’s finance-related dealings can help you get started on the right foot.

 

Stimulus Payments

If you received a stimulus payment in 2021, you should report this income to your accountant. If you didn’t receive a payment, you may qualify for it on your 2021 return.

 

Advanced Child Payments

You need to determine the total amount of advance credit dollars you received this year in regard to child tax credits. Be on the lookout in January 2022 for a letter from the IRS – called Letter 6419 – which will state the total amount you received.

 

Home Office

If you worked out of your home in 2021, you may be able to deduct certain expenses. Review your office related purchases – you can download credit card statements and bank statements to make it easier. Measure the physical space where your office is located because you may be able to claim it when you file.

 

Unemployment Benefits

If you received unemployment benefits during the year, make sure you have all of the documentation. Depending upon when you filed, and if you collected additional funds due to state or federal relief programs, it could result in having to pay taxes on this income. If you access the website where you normally file, there should be an option that allows you to download all of your benefits into an electronic file.

 

Don’t Press the Panic Button!

Prepping for the 2022 tax season doesn’t have to be stressful if you’re organized and have a clear idea of your expenses and related financial information. It’s a good idea to consider working with an accomplished CPA firm staffed by experts who are up to date on tax laws and filing procedures.

 

Taurus CPAs has the expertise, knowledge and qualified staff to help you navigate your 2022 tax return. If you have questions about our services, or need to speak with one of our experts, contact us today.