Tax Guide for 2022: Top 10 Planning Considerations

The 2022 tax season will provide additional complexity, such as new tax deductions and credits, which may make this year's taxes both more difficult and profitable. Reconciling child tax credit and stimulus payments, accounting for investment and gig income, and submitting proper taxes are all huge challenges this year. The best general recommendation is to: To prevent a backlog of paper returns at the IRS, submit electronically and seek assistance if necessary. Here are some additional tax ideas for 2022 to assist you in filing your return this year. 1. Get a Head Start to Avoid Delays According to the IRS, this year's filing season may be particularly challenging, with IRS personnel working tirelessly to answer inquiries regarding new and possibly perplexing filing rules. Your reimbursement will almost probably be delayed if your return is marked for review. What makes a difference? If your tax return is straightforward (a single W-2 with standardized deductions), file it early and electronically. Set up direct deposit with the IRS to avoid any postal delays. If your tax return is more complicated, gather your information and get advice as soon as possible. The sooner you begin, the more time you'll have to seek down missing data, reconcile disputes, or locate a skilled tax specialist. 2. Submit a Correct Return An IRS audit is frequently triggered by inaccuracies. The IRS compares information on your tax return to W-2 forms from your company, 1099s from customers, banks, or investment firms, and payment data from the government. If your tax return differs from what the IRS has on file, it might be subjected to a manual review, which could result in a full-fledged audit and a delay in receiving your refund. 3. Make preparations for an extension, if you're in need of one If you are unable to gather your tax information before the April 18 deadline, you can submit an extension to stretch your due to October 17. But don't put off paying your taxes: If you want to avoid fines and interest, the IRS expects you to provide a good faith estimate. This year, keep in mind all IRS deadlines, including anticipated tax payments for 2022. 4. Make a claim for child tax credits For the 2021 tax year, parents may be eligible for child tax credits ranging from $3,000 to $3,600 per kid. You may have already received half of your potential credits as advance child tax credit payments between July and December if you qualify. Double-check your work for correctness. If your numbers don't match the IRS's records, your return will be flagged. IRS Letter 6419, which specifies how much filers have received in advance child tax credit payments, can be used to double-check your calculations. If you can't find your IRS letter, utilize your tax transcript to double-check the number of your economic impact payments. 5. Investments from other countries If you are an Australian resident who owns assets in another country, you must report any capital gains or losses on such assets in your tax return. You may also have to report income from foreign investments on your tax return. Even if your money is housed in a foreign bank account for you, you can get it. You may be eligible for an Australian foreign income tax offset if you obtain overseas income or gains that are taxable in Australia and paid foreign tax on them. For any further information try getting in touch with a tax accountant in Sydney to gain more information on the required tax topic. 6. Reconcile the Recovery Rebate Credit and Stimulus Payments You should have gotten IRS Letter 6475 detailing your third stimulus payment in 2021 if you received one. You may also look for payment information on your tax transcript. This data can assist you in deciding whether or not to claim the Recovery Rebate Credit on your 2021 tax return. The Recovery Rebate Credit is for taxpayers who have not yet received the entire amount of stimulus payments owed to them in the prior three rounds of stimulus payments—an uncommon occurrence at this stage. 7. Don't Forget About the 2021 Charitable Deduction If you use the standard deduction instead of itemizing, you won't be able to deduct charitable contributions. Even if you don't itemize, you can claim up to $300 in gifts ($600 for married couples filing jointly) for the 2021 tax year. Gifts must be paid to a qualified charity, and the deduction is only available for cash donations and non-reimbursable volunteer expenditures. If you make a qualifying gift of that level, you can deduct up to 100 percent of your adjusted gross income in 2021 only. 8. Don't Forget About Unemployment Compensation Benefits received in 2021, unlike those obtained in 2020, are taxable, so don't forget to record them on your tax return. You may owe more tax if taxes were not deducted from your benefit payments. 9. Take a look at how much money you're making through side hustles You must record and pay taxes on income generated in the gig economy, such as driving for a delivery app, renting out a parking space, or conducting doggie daycare at home. You may need to submit Schedule C: Profit or Loss from Business, depending on whether you worked as an employee or a contractor. The good news is that if you're self-employed, you might be able to deduct some of your automobile or home office expenditures. The bad news is that business taxes are more difficult. Visit the IRS's Gig Economy Tax Center for further information. 10. Report Investment Profits, Including Cryptocurrency Profits Capital gains taxes aren't calculated on the value of your investments; rather, they're calculated on the profits you make when you sell an investment for more than you bought for it. You owe nothing if you didn't sell anything in 2021. If you profited from the sale of stocks, mutual funds, real estate, cryptocurrencies, or another investment, you must record the gain (or loss) on your tax return and pay any capital gains taxes due. Because calling the IRS hotline may be difficult this year, the IRS provides online tools that may be useful in answering your inquiries. Their guide to getting a head start on your 2021 taxes includes information on how to prepare and track your return, as well as electronic filing choices for people and resources for e-filing your return, which is the quickest way to a refund this year.