There are a few simple steps you can start doing now to prepare for filing your tax return.
Organise your paperwork
Having everything gathered together makes preparing and completing an accurate tax return much easier. You will need:
- Forms W-2 from your employer
- Forms 1099 from banks, issuing agencies and other payers including unemployment compensation, dividends, distributions from a pension, annuity or retirement plan
- Form 1099-K, 1099-MISC, W-2 or other income statement for workers in the gig economy
- Form 1099-INT for interest received
- Other income documents and records of virtual currency transactions
Income documents can help to determine if you're eligible for deductions or credits. People who need to reconcile their advance payments of the child tax credit and premium tax credit will need their related 2021 information. Those who did not receive their full third Economic Impact Payments will need their third payment amounts to figure and claim the 2021 recovery rebate credit.
You should also keep end of year documents including:
- Letter 6419, 2021 Total Advance Child Tax Credit Payments, to reconcile advance child tax credit payments
- Letter 6475, Your 2021 Economic Impact Payment, to determine eligibility to claim the recovery rebate credit
- Form 1095-A, Health Insurance Marketplace Statement, to reconcile advance premium tax credits for Marketplace coverage
It is important to remember that you need to keep copies of tax returns and all supporting documents for at least three years.
Review proper tax withholding and make adjustments if needed
- You may want to consider adjusting your withholding if you owed taxes or received a large refund in 2021. Changing withholding can help avoid a tax bill or let you keep more money each payday. Life changes – getting married or divorced, welcoming a child or taking on a second job – may also be reasons to change withholding. You might think about completing a new Form W-4, Employee's Withholding Certificate, each year and when personal or financial situations change.
- You also need to consider estimated tax payments. Individuals who receive a substantial amount of non-wage income like self-employment income, investment income, taxable Social Security benefits and in some instances, pension and annuity income should make quarterly estimated tax payments. The last payment for 2021 is due on January 18, 2022.
How we can help
If you need help to complete your tax return contact us today. TaxAssist offers an expert professional advisory service. Call us on 888 547 9295 or inquire online here to book your free, no obligation consultation.
Date published Dec 16, 2021This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.
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