Tax Tips for the Upcoming Tax Season

Posted on by Financial Connections LLC
Tax Service Vancouver WA

The new year is here! We all know that following the new year’s celebrations comes tax season. With all of the festivities behind us, we now have to face our taxes and everything that comes with it. And this can be a daunting task for many people. No matter if you’re an employee or business owner, here are a few basic tax tips you might find helpful, including how to avoid tax penalties for this upcoming tax season.

Contribute to Retirement Plans

The government offers tax incentives for retirement savings, but most people don’t take advantage of these benefits. If you haven’t funded your retirement account for 2021, don’t worry! You have until the tax return filing date to get this done. By not funding your IRA or 401k, you are missing out on an excellent opportunity to lower your tax bill! The amount you save for making contributions can vary depending on the amount of contribution, the number of years you have contributed to your retirement plan, and your tax bracket.

Organize Your RecordsBusiness Bookkeeping Services Vancouver WA

It’s tough to keep track of all the financial documents you need. That’s why staying organized is extremely important when it comes to taxes. Not being organized can lead to missed deadlines, penalties and extra costs. Staying organized will save you a lot of stress and headache.

An excellent place to start is ensuring you have all the proper documentation, such as last year’s tax return(s), this year’s W-2’s and 1099s, receipts, etc.

There are many tax checklists available online to help you prepare for the tax season, and they’re a great way of staying organized!

Find Correct Tax Forms

There are many different tax forms, so knowing which one applies to you can be confusing. It’s crucial that you get the correct forms for your taxes, or else you could end up owing money or getting a smaller refund than expected. If you don’t know which tax form applies to you, it’s best to speak to a tax professional, your employer, or visit the IRS website. These are all great resources that will be able to point you in the right direction.

Filing Itemized vs. Standard Deductions?

Itemized deductions reduce your adjusted gross income (AGI). If you itemize deductions, there are a number of expenses that can be deducted from your taxable income. These include mortgage interest payments, charitable contributions and state and local taxes paid during the year. The IRS has strict rules about what is allowed as a deduction, and the last thing you want is an audit by the IRS to result in additional taxes owed because some of your deductions were disallowed.

A standard deduction is a fixed dollar amount that decreases the taxable amount on your income. These are:

  • For single or married filing separately — $12,550
  • For married filing jointly or qualifying widow(er) — $25,100
  • For the head of household — $18,800

Most taxpayers choose to claim the standard deduction as it is more straightforward and less complicated than itemized deductions.

Provide Dependent Taxpayer ID’s on Your Tax Return

When filing dependents on your tax returns, be sure to include their Taxpayer Identification Numbers (usually their Social Security Number (SSI)). If you miss this step, the IRS will deny all dependent credits you might be eligible for, such as Child Tax Credits. Don’t forget that only one of the parents can claim a child as a dependent on their taxes for divorced couples.

File and Pay on Time

Filing your taxes on time is important. However, if you can’t file by the deadline, you need to request an extension. Fortunately, there’s a form called Form 4868 that you can fill out in order to get more time to file your tax return. You will need to fill out this form before April 18, 2022. By doing so, you will be granted a filing extension deadline until October 15, 2022. If you forget to do this, the IRS can require you to pay a late-filing penalty. The best way to avoid this is by staying organized!

Decide If You Will Need HelpTax Professionals Vancouver WA

Taxes can be complicated and hard to understand. This is why it’s better to be safe than sorry, no matter if you’re an employee, unemployed, or a business owner! Hiring a professional tax service to help you with your taxes is the best way to ensure everything is done and filed correctly.

At Financial Connections, we understand the complexities of Washington State and Federal tax regulations. Our employees stay up-to-date on the latest changes and amendments to tax provisions in order to ensure our clients don’t miss out on opportunities for gains on their taxes while avoiding late penalties.

Call Financial Connections!

Financial Connections has earned a highly respected reputation for its comprehensive business services, ranging from Accounting Services to Extensive Financial Balancing and Consulting. We have built our reputation by responding promptly to our client’s needs and delivering high-quality professional services. Whether you’re a business owner who needs to set up an accounting system or an individual preparing for tax season, our accountants and bookkeepers help you create and maintain organized, meaningful records. Financial data can be challenging to analyze, classify, and summarize. That’s why we provide an invaluable service by developing easy-to-understand reports so you can get the correct information to the right places on time. Call us or visit our website for more information on how we can help you!



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