By Phil West, WCI Contributor
When the last quarter of the year rolls around, that should be your signal to start thinking about filing your taxes. The process goes more smoothly if you start with a tax preparation checklist with all the items that apply to your situation for the 2022 fiscal year and then check those off as you do them. The earlier you get them in, the more time you’ll have to adjust for the coming year—and, if you owe, the more time you'll have to figure out how to approach paying it off before the April 15 deadline.
For some people, the approach of Q4 means that the extension deadline for the prior year is coming quickly. For the 2021 tax year, for example, those who extended their personal taxes get a couple of extra days to get everything together. The typical extension due date is Oct. 15, according to the IRS, but if Oct. 15 happens to fall on a Saturday, Sunday, or holiday, it gets extended to the next business day. So, the last day to file taxes in 2022 (assuming you filed an extension this past spring for your 2021 taxes) is Oct. 17.
Regardless of what you did to handle the prior year’s taxes, preparing for the current tax year can start during the year and then carry over into the first quarter of the following year before taxes are due.
What Do I Need to File My Taxes?
It’s a good idea to have your prior year’s tax form at the ready, as some of that information (such as Social Security numbers and dependent lists) will carry over from year to year.
If you itemize your deductions, there are a number of things you can pull together throughout the year to simplify your tax preparation. If you don’t itemize your deductions, you may find that it’s actually advantageous for you to do so once you add up all the numbers.
During the year, you should keep a file of these items:
- Business expenses related to your home (including home office expenses and utilities)
- Casualty and theft losses
- Charitable donations
- Child care payments (including tax ID number for the provider)
- Education costs (to be eventually backed up with a 1098-T form)
- Estimated tax payments made during the year
- Investment interest expenses
- Medical and dental expense records
- Mortgage interest, private mortgage insurance (PMI), and points you paid
- Records and receipts for any qualifying energy-efficient home improvements
- Spousal support/alimony payments
Once you make it to the start of the new year, you should receive the following records (or should be able to access them online), and gather them:
- W-2 forms from all the companies where you and other family members worked in the past year
- 1099-MISC forms to cover all the sources of income received for independent contract work
- Form 1098-E for student loan interest paid
- Form 1098-T for tuition paid
- Form 1099-C for cancellation of debt
- Form 1099-G for unemployment income, or state or local tax refunds
- Form 1099-INT, for interest income
- Forms 1099-R and 8606 for payments/distributions from IRAs or retirement plans
- Form 1099-S, for income from the sale of a property
- Records of IRA contributions made during the year
You also can itemize state, local, and property taxes, though according to the IRS, “As an individual, your deduction of state and local income, sales, and property taxes is limited to a combined total deduction of $10,000 ($5,000 if married filing separately).” You should have what you need through your W-2s and 1099s to tabulate those totals and add them to your other itemized deductions.
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Where Can I Get Tax Forms? And What Tax Forms Do I Need?
If you’re choosing to prepare your taxes yourself, you can get the IRS tax forms you need on the IRS website at irs.gov. If you’re filing just personal taxes, Form 1040 is the first one to grab, though depending on how you make your money, you might need a Schedule A (if you’re itemizing your deductions), Schedule B (for Interest and Ordinary Dividends) and Schedule D (for Capital Gains and Losses).
If you own or operate a business, you’ll also file Form 1120 handling your company’s tax info for the year. According to the IRS’s calendar, the 1120 due date depends on when the company’s fiscal year ends.
It notes, “This form is due on the 15th day of the 4th month after the end of the corporation’s tax year. However, a corporation with a fiscal tax year ending June 30 must file by the 15th day of the 3rd month after the end of its tax year. A corporation with a short tax year ending anytime in June will be treated as if the short year ended on June 30, and must file by the 15th day of the 3rd month after the end of its tax year.”
If you’re using tax preparation software, like TurboTax for instance, these programs guide you through tax filing and actually fill out the forms on your behalf. That means you won't need to spend time finding and downloading these forms.
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When Should I File My Taxes?
Though the deadline for personal income taxes is April 15, you can file as soon as you have everything ready. If you’re owed a refund, the advantage of filing early is obvious. The official word from the agency’s site is, “The IRS issues most refunds in fewer than 21 days for taxpayers who file electronically and choose direct deposit. However, some returns have errors or need more review and may take longer to process. The IRS works hard to get refunds to taxpayers quickly, but taxpayers shouldn't rely on getting a refund by a certain date.”
If you’re delayed because you’re missing a W-2, the IRS has a list of steps to take, starting with contacting the employer in question to try to track it down.
What If I Need to File a Tax Extension?
The IRS site notes, “If you can’t file by the due date of your return, you should request an extension of time to file. To receive an automatic six-month extension of time to file your return, you must file Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return by the due date of your return.”
But even if you get an extension to file your taxes, that doesn't mean you can delay your payment. If you don't pay what you owe by April 15, you'll be subject to a late payment penalty. If you feel that you might owe, you can submit an estimated payment earmarked toward that year’s taxes.
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How Do I Pay Taxes I Owe?
If you don’t yet have access to EFTPS, a website set up by the Department of the Treasury to handle online payments, you should put that at the top of your to-do list. It can take a few weeks to get it set up. In fact, you’ll be mailed a PIN to use on that site, and that step alone takes about a week or so. But once it’s all in place, it’ll make payments incredibly simple, and you’ll be able to see a record of what you’ve paid that goes back more than a year. (You can get one for your business as well, but you have to get a separate account—you log in using either your Social Security number or EIN.)
You can also mail a check or you can go through the IRS site directly, but once you set up EFTPS, you won’t want to go back to anything else.
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Should You Get a CPA to Do Your Taxes?
This might be the most important question of all. It’s vital that you get together all the documents you need to file your taxes. That’s the first important step to making sure your taxes are done well, completely, and accurately.
But if you feel like your taxes are more complex than you can or want to handle on your own, bringing in a CPA could save you time, energy, and headaches. Also, CPAs who are well versed in tax law and its year-to-year changes might have knowledge that will save you money. But it’s a good idea to find a reliable one you like before you need to start the tax preparation process—it can add stress and uncertainty to bring on a CPA at the very last minute.
If you need help with tax preparation or you’re looking for tips on the best tax strategies, hire a WCI-vetted professional to help you figure it out.
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