Filing Taxes 2022: What You Need to Know About Handling Taxes this Year
Tax preparation isn’t exactly the most exciting topic in the world, and it might even end up being a definite dwindle on your wallet.
Getting prepared to file your taxes is just one more thing to add to your list of to-dos, but it’s a necessary part of being a citizen.
What is filing taxes, exactly? When you file your taxes, you report income, expenses and other relevant financial information. Taxpayers must calculate their tax liability, schedule tax payments, or request refunds on your tax return when they overpay taxes.
Let’s go over how to choose to file taxes, how to gather tax filing information and what to do next when you file during this tax year.
Choose How to File Taxes
How do you like to file taxes? Do you like to do it yourself through an e-file situation, through tax preparation software like TaxAct or TurboTax? Let’s take a look at how you might want to file your taxes, and remember that there’s no one “right” answer. Let’s go over some things to think about if you plan to do it yourself and also if you plan to get expert help.
Do it Yourself
Do you plan to file your own taxes? If so, it’s important to make sure you have all the tax documents you need in order to make sure you maximize your refund, but note that there’s never a refund guarantee. It’s important to understand what you’re eligible for, including things like the saver’s credit, student loan interest deduction, charitable deductions and more. Let’s take a quick look at a couple:
- Student loan interest: Are you repaying student loans? Of the interest you pay, you can deduct $2,500 in interest payments, but of course, that depends on your modified adjusted gross income.
- Charitable deductions: Have you made charitable donations this year? If you have, you can deduct them but you must itemize your taxes.
Credits, on the other hand, offer dollar-for-dollar cuts in any tax you owe. But as with deductions, you need documentation to claim them. Here are some popular tax credits:
- American Opportunity and Lifetime Learning credits: Education-related credits can save you money from paying tuition and fees.
- Saver’s credit: What’s the saver’s credit? You may be eligible for a saver’s tax credit if you contribute to a retirement fund like a 401(k) or an IRA. What does it depend on? Your filing status and adjusted gross income. In this tax year, you might find yourself eligible if you have an adjusted gross income if you are single and make $34,000 or less. Those married and filing jointly may find themselves eligible if their adjusted gross income is $68,000 or less.
It’s a good idea to know as much as possible about mortgage interest deductions, HSA contribution deductions, medical and dental expenses, gambling losses as well as state tax and local taxes.
Think you might qualify for additional credits or deductions? Take a look at the full list by checking the IRS website.
Get Expert Help
If you want to hand it off from start to finish, you can have a professional handle your tax information and tax forms for you. If you have a complicated tax situation, you may want to have an accountant help you.
Take a quick look at the documents you can bring to a tax preparer: Social Security documents, income statements (including W-2s), other types of income reporting forms, tax deduction records and expense receipts.
If you’re self-employed, you also need to be prepared to provide as much information to your tax preparer, such as MISC-1099s.
If you have expenses to deduct for personal or business income taxes, you can share receipts for medical bills, charitable and IRA contributions and education expenses.
What is the Tax Filing Deadline this Year?
Tax day in the United States is Monday, April 18, 2022. No extension was announced this year because no major changes have occurred to the tax code nor other disruptions that require a full extension.
How the Child Tax Credit and Other Benefits May Change This Year
The American Rescue Plan increased the amount of the credit and eligible expenses for child and dependent care, and eligible taxpayers can claim qualifying child and dependent care expenses of up to $8,000 for one qualifying child or dependent, up from $3,000 in prior years, or $16,000 for two or more qualifying dependents. In addition, parents of a child born in 2021, those who adopted or were in foster care, as well as the addition of a dependent included:
- Parents of a child born in 2021: Parents of a child born in 2021 who claim the child as a dependent on their 2021 income tax return may be eligible to receive a 2021 Recovery Rebate Credit of up to $1,400 for this child.
- Adoption or foster care: All eligible parents of qualifying children born or welcomed through adoption or foster care in 2021 were eligible to take advantage of the Child Tax Credit, worth up to $3,600 per child born in 2021
- Addition of a dependent: An added dependent (a parent, nephew or niece or grandchildren) can go on the 2021 income tax return.
The American Rescue Plan increased the amount of the Child Tax Credit (CTC) for 17-year-old dependents in Schedule 8812 to their return.
The American Rescue Plan increased the child tax credit to as much as $3,000 per child for dependents ages six through 17 and $3,600 for dependents ages five and under.
The maximum credit is available to taxpayers with a modified adjusted gross income (AGI) of $75,000 or less for single filers, $112,500 or less for heads of household and $150,000 or less for married couples filing a joint return as well as qualified widows and widowers.
Above these income thresholds, the amount was reduced.
How to File Tax Information
When you file your taxes, you can take the standard deduction or itemize your deductions. Taking the standard deduction amounts to $12,950 for individuals and $25,900 for individuals filing jointly. If your individual deductions add up to more than that, consider itemizing. (That’s when you have to gather all your tax receipts.)
You’ll have to choose your filing status: single, married filing jointly, married filing separately, head of household and qualifying widower. The obvious filing statuses are single and married filing jointly. However, let’s go over the definitions of married filing separately and as a qualifying widower.
- Married filing separately: If you for some reason don’t want to file jointly or filing separately will result in a lower tax bill, you may want this filing status.
- Head of household: For this filing status, you must be unmarried, have paid for more than half of the household expenses for the year and must have a qualifying child or dependent.
- Qualifying widow: If your spouse dies and you don’t remarry during the tax year, you and your deceased spouse’s taxes can be filed together. You can do the same following two years following the year of death.
Finally, you’ll file your taxes after you determine what you want your filing status to be.
Try to get them done soon — penalties can zip upward to 5% of the amount due with your return every month that you are late with your tax returns. If you don’t file your federal income taxes or state income taxes on time, or in fact, if you’re 60 days late, the minimum penalty is $100 or 100% of the tax due with the return, whichever is less. Filing on time will help you alleviate stress and protection from tax fraud.
What to Do Next with the IRS
If you owe money to the IRS, it’s obviously best to pay your taxes on the tax deadline (or before). However, if you can’t pay the full amount right away for that tax season, consider one of the payment agreements the IRS offers, such as an agreement to pay within the next 10 days, a short-term payment plan in the next 11 to 120 days or an installment agreement.
On the other hand, you may be itching to get the maximum refund possible. But how long will it take? Great question.
The IRS usually issues refunds in less than 21 days. You can figure out where your refund is by using the Where’s My Refund? tool or contact the IRS by calling 800-829-1954 to figure out where your refund is. You can do this even 24 hours after you e-file. You should get an exact date as soon as the IRS approves your tax return and refund.
Don’t Miss the Deadline for Filing Taxes in 2022
The tax deadline is one of the easiest things to keep track of regarding your taxes. However, everything else can be quite complicated. Knowing the details of filing taxes, details about the child tax credit and deductions (and more!) can be hard to keep track of, especially if you own a small business. If you’re not confident in how you might want to handle your taxes, it’s best to get someone on your side to help. Don’t be afraid to hire a tax professional!
UNest has partners with H&R Block that can help families maximize refunds.