Seven Things to Know Before Filing Your 2022 Taxes

Editor’s note: Before altering your tax strategy, it’s important to sit down and consult with your tax specialist. They have a firm understanding of your wants and needs, as well as the knowledge of tax law required to maximize your wealth potential.

Quorum is not affiliated with any of the companies mentioned in this article and derives no benefit from these businesses for placement in this article.

With winter in full swing, spring seems very far away. But April, aka tax time, will be here before you know it. So, we’re answering some of your most pressing questions about this year’s tax season to help you get through it as smoothly as possible.

When can you start working on your 2022 taxes?

You can get a jump start on tax season this month. January is a great time to tackle several tax filing organizational to-dos’:

• Make a list of everything you’ll need to file your return: Here are some of the most common things to include on that list:
  • A social security number for you, your spouse and any dependents you plan to claim
  • Last year’s federal and state returns
  • Documentation of any federal, state or local estimated taxes you paid in 2022
  • A W-2 from every employer you worked for last year
  • 1099s for earnings generated by interest, dividends and freelance or contract work
  • Personal and business receipts
• Start a tax file: It can be paper-based or a password-protected electronic file, but this is where you’ll safely store all of the above items as soon as you gather or receive them.
• Gather your tax-relevant receipts: On the personal side of things, this includes receipts for things like out-of-pocket healthcare costs, charitable donations and energy saving purchases that qualify you for tax credits. If you have your own business, you’ll need receipts for all qualified business expenses, such as office supplies, internet, wi-fi, phone, etc.
• Consider any life changes: Make a note of anything that is different from last year that could affect your tax situation. This would include getting married or divorced or having or adopting a child in 2022.
• Think ahead: Consider what you’ll do with a tax refund if you’re expecting one. Likewise, make a plan for how to pay any additional tax you think you’ll owe with your return.

When should you receive tax documents?

Businesses that owe you a W-2 or 1099 must mail them by January 31. If you have the choice to receive these tax documents electronically, take advantage of it. This will eliminate any postal delays as well as the potential for postal theft, a frequent tactic of criminals looking to steal identities to commit financial fraud.

Why did you get a Form 1099-K from a payment platform?

Over the course of 2022, did you receive more than $600 in payments through a person-to-person (P2P) platform like Venmo or PayPal? In the following situations, the IRS says you should expect a 1099-K from that third-party transaction service provider:

• Offering services as a gig worker or freelancer
• Selling goods as an individual entrepreneur
• Selling personal items, such as concert tickets or household items

Previously, such payment platforms only had to issue a 1099-K if you had more than 200 transactions in a year that amounted to more than $20,000.

Why are certain tax credits and deductions different from 2021?

As part of the American Rescue Plan, the following tax credits were temporarily increased for the 2021 tax filing year. These increases do not extend to 2022:

• Child tax credit: It’s $2,000 for children up to age 17 as compared the 2021 tax year amounts of $3,600 for children under age six and $3,000 for children ages six to 17.
• Child and dependent care tax credit: In 2022, this credit, which helps offset the cost of childcare, is capped at $2,100 versus $8,000 for 2021.

Last year, tax filers who took the standard deduction could deduct up to $600 more in charitable donations as part of COVID relief. That is not the case for 2022.

How can you file your 2022 income tax return?

There are several ways to prepare and file your tax return. They include the following DIY options:

• IRS Free File: If your adjusted gross income doesn’t exceed $73,000, you can use this free service offered by the IRS.
• Tax software: You can also choose tax software at various price points depending on your situation from providers like H&R Block, TaxAct and TurboTax. The software walks you through your return and lets you file it electronically.

Or you can hire a tax professional from a national or local firm to handle your 2022 tax return for you.

When are 2022 income taxes due?

Federal income taxes are due on Tuesday, April 18 this year. This means they either need to be postmarked by the U.S. postal service or filed electronically on that day. The due date for your state tax return may differ, so check with your state’s department of revenue to make sure you file it on time.

How do recent IRS inflation adjustments affect your tax return?

Finally, toward the end of 2022, you may have heard that the IRS was adjusting its tax bracket thresholds to account for inflation. These changes won’t affect your 2022 tax return, but they could change your 2023 return. So, now’s a good time to check with a reputable tax professional or resource to determine if you should adjust your withholdings or do anything else to lower your tax bill next year.