We’re already almost through December, which means the new year is quickly approaching! Don’t let that scare you for tax season, though. BaCo Group has a handful of tax tips for you to keep in mind as the new year rolls around. These tips will help you get a head start in tax season, stay organized, and make sure you have all of the right things prepared for your CPA to finish your tax return. Keep reading to find out what BaCo’s top tips are for the new year!
Keep Your Records Organized
Staying organized before tax season might not change your tax bill, but it helps in other ways. For example, many people find themselves struggling to come up with or find all of their documents in the stressful time of tax season. If you’re organized ahead of time and keep everything together, you’ll be prepared to file your return when the deadline rolls around.
One way to stay organized is by making a checklist. Your checklist should include all the tax documents you’ll need to complete your return. Another tip for staying organized is don’t throw away any documents from the mail that could be tax-related. Even if something doesn’t seem like it will be very important, you should keep it. If you don’t want to stockpile a bunch of papers that you don’t need, talk to your CPA about what you should keep and what you shouldn’t.
Home Office Deduction
We are all aware that the pandemic has changed the dynamics of work environments, one of those changes being that people work from home more often these days. This means that if there is a portion of your home or apartment that is used exclusively for business, you are eligible for the home office deduction. Additionally, other house costs that go towards operating your home office are part of that deduction as well, such as the percentage of the rent for that space, insurance, etc. However, there are some stipulations for claiming this deduction, so get in touch with your CPA to ensure you’re claiming that deduction properly.
Add Dependent Taxpayer IDs to Your Return
There are certain dependent credits you might be eligible for, but you can’t receive those if you don’t claim your dependents. Be sure to plug in your children’s social security numbers/taxpayer-identification numbers in your return before you submit it. If you are divorced, make sure you talk with each other about who is claiming the dependents on their return. You can’t put dependents on both of your returns, and the IRS has become more adamant about checking for this.
File and Pay on Time
You should watch the calendar and make sure you can get your return filed on time and that you can pay on time as well. If you can’t, you should file Form 4868 by April 18th, 2022. This form will give you an extension of the filing deadline until October 15th, 2022. Failing to turn in this form or your return on time will result in hefty fines that you don’t want to run into. These include a 4.5% late-filing penalty per month of the tax owed and a 0.5% late-payment penalty a month of the tax due. That’s why staying organized is very important as the new year begins because you don’t want to get to April 15th unprepared and scrambling to avoid these fees and then being stuck with them anyway.
If you need assistance preparing for the next tax season, call the BaCo Group! Our CPAs can give you more tips on how to start tax preparing for the new year and guide you through the process to make sure you stay organized and ahead of schedule. We want to avoid tax season stress just as much as you do, so call us today to set up a meeting with us!
Published on Dec 28 @ 9:27 AM CDT