Tax Tips for 2022
The 2022 tax season is in full swing, and soon you’ll need to file your tax return. To ensure you are ready, consider these tax tips:
1. Make Sure to Save Tax Documents
You’ll probably begin receiving a variety of tax documents, including earnings reports from your employer, information on economic stimulus payments, and home mortgage interest statements.
Depending on how you earned and spent your money throughout the year, you may receive many more. Each one of these documents is extremely important for preparing your taxes.
Whether you prepare your own taxes or engage the services of a tax preparer, you must save these documents and compare them against your own records. If any amounts on the forms appear to be incorrect, make sure to contact the entity that sent them to you to discuss any variances for transparency purposes.
2. Have Your Expense Receipts Ready
If you own or operate a small business, make sure to save any business-related receipts for expenses. You should have them organized by type, if possible.
There are significant write-offs allowed for sole proprietors, freelancers, and partnerships. However, before declaring the amount of the expenses on your tax return, make sure you have the documentation available should you be selected for an audit down the line.
3. Determine Whether You Will Itemize or Take the Standard Deduction
The Tax Cuts and Jobs Act of 2017 allowed for a significant increase to the standard deduction. In fact, almost 90% of taxpayers now take the standard deduction rather than itemizing their taxes. The standard deduction rates for all filing statuses of 2021 are:
|Filing Status||Age as of 12/31/2021||Standard Deduction|
|Married Filing Jointly||Under 65
65 or older (one spouse)
65 or older (both spouses)
|Married Filing Separately||Any Age||$5|
|Head of Household||Under 65
65 or Older
|Qualifying Widower||Under 65
65 or Older
If you believe that itemizing your taxes could lead to a higher exemption, by all means, take it. However, ensure that you have the documentation available for all of your itemized deductions.
4. Consider Hiring a Tax Preparer
A tax preparer can sort out any questions you have when filing your taxes. Their sole focus is ensuring that you properly include all earnings and maximize the deductions available to you.
If you struggle with your taxes each year, it can be a relief to seek the advice of a trained practitioner. While engaging the services of a CPA or EA may be an expense, the value of their services cannot be overstated.
Getting Ready for Next Year
If you find yourself owing taxes for the 2021 financial year, consider engaging with a financial planning service. The financial planning process includes steps that you can take to mitigate your taxes owed. Mash Financial Planning, located in Jacksonville, Florida, is eager to help you. Contact us to get started today!