Year-End Moves to Prepare for Tax Season
With a packed calendar and a to-do list to rival Santa’s it’s unlikely you’re spending much time thinking about next tax season. But that doesn’t mean you shouldn’t give your taxes a little time this month. As your last chance to address a few tax issues before the end of the year, we’d argue that there’s no BETTER time to think about your taxes than right now.
So, here are a few tax tips and reminders for December that can save you money…and headaches after you ring in the New Year.
Note the filing deadline
After two years of extended deadlines, please note that 2022 brings back the traditional IRS tax deadline of April 15, 2022.
Note the beginning of tax season
Just because April 15th is the deadline, that doesn’t mean you have to wait until then to submit your tax returns. In fact, the IRS will start accepting returns on January 31, 2022. If you’re expecting to get a refund, there’s no reason to delay. The sooner you get your return in, the sooner you’ll receive your funds.
Adjust your amount withholding if necessary
December is your last chance to adjust your withholding on your paychecks. If you owed taxes or received a big refund last year, it’s possible that the amount your withholding is incorrect. If you’re not sure, you can use this Tax Withholding Estimator to help determine the right amount of tax to have withheld from your paycheck. Additionally, if you’ve had a significant life change (marriage, divorce, new child, etc.) your withholding may also need to be adjusted.
Decide who will prepare your tax returns
If you do not prepare your own returns, now is the time to choose your tax preparer for the 2022 cycle. Tax preparing services are well worth it, but not inexpensive. The closer you get to the deadline, the higher those rates can climb. Choose and secure your tax preparer now.
If you haven’t done so already, grab a folder and start collecting the documents you’ll need to prepare your returns. You can sort through this later. For now, just create a folder, box, or container and start filling it with the receipts, records, and other relevant documentation from the year.
Declutter and Donate
There are a few reasons that nearly every charitable entity is asking for donations in December. One is that it is your last chance, before the year ends, to reduce your tax burden by donating money and items to qualified charitable organizations.
If you itemize your deductions, you can deduct the “fair market value” of any goods you donate. This includes furniture, clothing, and household items. If you claim a donation worth more than $250, you’ll need a receipt or written acknowledgment from the organization. If your donated goods are high value, such as antiques worth more than $5000, you’ll likely need a written appraisal.
Cash donations to qualified charities can also be deducted from your taxes if you itemize.
Watch out for scammers and warn elderly friends and family
If you get a phone call from the IRS…hang up. The IRS will not call you on the phone and will only communicate with you via the mail (postal service, not email).
However, this doesn’t stop scammers from calling and using scare tactics to procure confidential information. The elderly are both targeted and particularly susceptible to this kind of scam. So, if you have elderly friends and family, be sure and add an extra warning to hang up on anyone calling and claiming to be from the IRS.
For more information about preparing for tax season contact our specialists at 610-422-3530.