7 last-minute tax filing tips for 2022 – KIRO 7 News Seattle
It’s time, procrastinators.
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The Internal Revenue Service’s official deadline for filing your 2021 tax return is today, and here’s what you need to know:
1. Make the deadline.
Filing your returns on time means either filing electronically or sending your return by midnight on April 18. To prove that you did, either a timestamp is required for returns filed electronically or a postmark for returns sent by mail that documents the date of filing.
2. Filing an extension is a perfectly acceptable option.
If you know you’re going to miss Monday’s deadline, filing an extension is your best bet to avoid late filing and payment penalties. Not only does an extension save you an extra six months to file your return, it also allows you to avoid the automatic late filing fee of 5% of your outstanding balance per month, capped at 25%, CNBC reported.
Remember, however, that extensions do not cancel taxes due.
“If you don’t pay your 2021 debt by April 18, you will be subject to penalties and interest on the amount you owe for 2021,” said Gail Rosen, a certified public accountant in Martinsville, New Jersey, at Forbes.
“Penalties plus interest represent a very high interest rate on a loan. So don’t think of an extension as a way to stave off the inevitable pain of paying,” she added.
3. Paperwork. Paperwork. Paperwork.
Documentation is essential to avoid IRS scrutiny, so make sure you have the appropriate forms for each type of reported income, as well as the proper documents to support write-offs when itemizing. According to CNBC, the most common of these forms include, but are not limited to:
- W-2 of your work
- 1099-NEC for contract work
- 1099-G for unemployment income
- 1098 for mortgage interest
- 5498 for Individual Retirement Account deposits
- 8606 for non-deductible IRA contribution
- 5498-SA for health savings account contributions
- 1099-B for capital gains and losses
- 1099-DIV for dividends and distributions
4. Check those deductions.
Eric Bronnenkant of New York-based financial advisory firm Betterment told Forbes that filers often overlook two main deduction opportunities: IRA deductions and HSA deductions.
Bronnenkant recommended “maximizing” traditional or Roth IRA contributions before the April 18 deadline to boost long-term savings.
“The 2021 contribution ceiling for [IRAs] is $6,000 for people under 50 and $7,000 for people 50 and over,” he told Forbes, explaining that traditional IRA contributions are made before tax. , reducing your overall tax bill.
Meanwhile, contributions to Roth IRAs aren’t tax-deductible but can still help you maximize the annual IRS retirement savings limit, giving your money more time to grow, Bronnenkant said. .
In contrast, health savings accounts provide an accessible pool of tax-free funds for medical expenses which he called a “triple tax advantage” because not only are contributions paid before tax, but also the income generated is at tax-deferred and “withdrawals as qualifying medical expenses are tax-exempt.
According to Forbes, the 2021 contribution limit for taxpayers covered by a high-deductible health plan is $3,600 for singles and $7,200 for families, and each spouse age 55 or older adds $1,000. additional to the contribution limit.
5. Don’t forget that investment income.
Investment income is often overlooked. out of mind category that may unintentionally complicate your return.
Ryan Marshall, certified financial planner and partner at ELA Financial Group in Wyckoff, New Jersey, told CNBC that filers often forget Form 1099-B for capital gains and losses and Form 1099-DIV for dividends and distributions.
“There’s a common misconception that if a client doesn’t physically receive payment for their investment, they’re not taxable,” Marshall said.
Meanwhile, Marianela Collado, CFP and CPA at Tobias Financial Advisors in Plantation, Fla., told the network that forgetting to file Form 8606 for non-deductible IRA contributions can create headaches. — and additional costs — because without such documentation, so-called “Roth conversions” that circumvent income limits for Roth IRA deposits can result in your being taxed twice on the same income.
6. Skipping unemployment benefits can really bite you.
Even if you’ve already paid taxes on your unemployment benefits, that income must be reported because the IRS doesn’t play games when the income numbers don’t match.
“A lot of people forget that maybe they only cashed a check or two,” Tatiana Tsoir, CPA and financial coach, told Forbes, noting that your return may be rejected if those numbers are out of balance.
7. Check for simple errors.
Before filing, ask yourself:
- Did you spell your name correctly?
- Is your social security number correct?
- Did you correctly enter your employer’s Employer Identification Number on your 1099 or W-2 when filing?
- Are your calculations correct if you file a paper return?
- Is your banking information, including your routing and account numbers, correct?
- Have you signed and dated your declaration if you sent it by post?
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