With the onset of 2022, tax practitioners everywhere are watching the upcoming tax season with panic and fear. Since the start of the pandemic, the tax industry hasn’t just been preparing tax returns. Rather they are piloting a range of schemes from helping customers obtain PPPs to reconciliation of incentive payments to tackling escalation in state audits. On top of that, the IRS isn’t picking up the phone and hasn’t processed all of his mail. If it wasn’t true it would be comical.
Yet taxes do not stop for anyone. As we begin to look to the 2022 filing season, tax practitioners have some wise advice for taxpayers who want to take control of their tax lives in the new year. Interestingly, many center around three unique tax concepts: timing, security, and organization.
This may sound strange to many people. After all, isn’t it about numbers? Sure, that’s a long time. But in the end, a tax return is reporting your financial life to the government. To have a clear picture of your finances making sure the process is considered is really important.
Adam Markowitz, EA & Vice President explains, “Trust us, it will take a little bit more time to make sure your return is accurate and how to communicate with the IRS about it later, Have to find out.” , Howard L. Markowitz PA, CPA of Leesburg, Florida.
Here’s some great advice for managing your tax returns for 2022 from tax professionals across the country.
basics of timing
When it comes to timing, preparing your tax data is an important part of the process.
“Start tax preparation early!” Colin Horsford, CPA and says Managing Partner, Horsford Accounting & Advisory in New York, NY. “2011 had many new tax implications such as additional child tax credits, stimulus payments, pandemic unemployment assistance and PPP waivers. That’s a lot of extra paperwork beyond the typical W-2s and 1099s that most taxpayers go through annually. ,
By organizing the material in a timely manner, it gives you a chance to discuss how your financial life could change.
“If you have any changes in the current year with your income compared to previous years — reach out to your tax preparer and let them know about it,” says Laurilyn Wilson, CPA and CEO of Lookahead LLC and Dunorth PDX in Portland, Oregon. Explain.” “This proactive move intra-year can set you up for a bigger tax bill you weren’t expecting and can sometimes help reduce it with tax planning strategies.”
Security has become a huge issue in the world of tax professionals. Many times, your tax professional is on the front line in helping you combat identity theft. Being active is important.
“Please don’t share your tax documents via email,” says Brian Strigg, CPA and partner at Calhoun, Thomson, & Matza LLP in Austin, Texas.
Why is this a big no-no? Security risks abound. If someone can get hold of your Social Security number, W-2 or other important documents, you are at risk of identity theft. And for better or for worst, most tax documents contain this important data.
“The safest option is to download forms from your financial institutions and then upload them to your tax professional’s portal,” advises Strig.
And if your tax practitioner doesn’t offer these types of secure services, it may be time to reconsider the relationship because tax professionals need to store your data in a secure way.
Be careful what you toss
One of the most common mistakes taxpayers make is that they don’t keep separate major tax stuff that comes in the mail or email.
“My piece of advice is to throw away any “important tax documents” or anything you receive from the IRS,” says Nicole Davis, CPA and founder of Butler-Davis Tax & Accounting, LLC in Atlanta, Georgia. Not there.” , “Put it in a folder and give it to your tax professional.”
New forms can be received this year.
“Taxpayers should look for IRS letter 6419 which will help reconcile the child tax credit they received and the child tax credit they have received,” Horsford says. “Taxpayers will need to compare the amount they qualify for filing their 2021 tax return to compare the amount they will receive.”
Ultimately being on the look out can help save money.
Says Davis, “Without the letter, you’ll need to pull up scripts that can cost you money (your tax professional may charge for extra work) and time (delayed refunds if you have a math error). )”.
organize your numbers
Tax professionals can be intimidated by dealing with a self-employed person who shows up with a shoebox of receipts. This is the worst way to prepare returns.
“To prepare an accurate tax return, it depends on your bookkeeping,” says Lily Tran, EA, CTC, NTPI Fellow at TaxUSign® in Kent, WA. “If your bookkeeping is messed up, your tax return will be wrong.”
Yet many self-employed individuals and small businesses don’t focus on streamlining their numbers. As a result, the deduction is missed, and tax planning is not possible. The good news is that there are plenty of programs out there that can help with bookkeeping. But there are some watch outs.
“If you’re doing bookkeeping yourself, be sure to review it. Make sure your books are in order and if you’re using an accounting system to track your income and expenses, by December 31st.” Reconcile,” Tran says.
process is important
The best way to set yourself up for success in 2022 in managing your tax returns is to focus on timing, safety, and organization. By engaging in this process, you allow your tax preparer to provide you with an accurate return and the best tax planning advice for your situation.