Michael Harvie, Staff Accountant
Old House Bookkeeping & Tax
January 27, 2022
“Hooray for tax season” is not a phrase most people tend to use. Tax season can be a stressful time for most people. But it doesn’t have to be, with a little preparation and know how. One of the main things that can save you when it comes to tax season is reporting income. Never try and guess if what you made was enough not to be taxed, unless you are a tax professional and know for a fact.
“It ain’t what you don’t know that gets you into trouble, it’s what you know for sure that just ain’t so.” (Mark Twain). Well one thing you should know is if you made money from it and it went into your account be sure to report it. At this point a lot of people can feel lost and don’t know where to start. You should start with collecting all necessary paperwork to ensure and accurate and timely return. What are the forms that a taxpayer should be on the lookout for? Here is a list of forms and why you might receive one.
W-2 Standard form received from employers.
1099 This can be issued from banks, agencies and other payers. This includes unemployment compensation. You can also receive this for dividends or distributions from pensions, annuities or retirement plans.
1099 K and 1099 Misc. These are for people who may have worked for Uber or Door Dash. Jobs like this are referred to as the gig economy. A search on Google should give you an accurate description of your job type if you need it.
1095 A This is for Health Insurance Marketplace Statements, so if you get your insurance through the marketplace be on the lookout for this document.
Letter 6419 and Letter 6475 The Child Tax Credit Payments will be on Letter 6419. You need this letter to reconcile your advance Child Tax Credits payments. Letter 6475 is for any Economic Impact Payments. You need this letter to determine your eligibility to claim the Recovery Rebate Credits.
Now that it is all broken down in a list it doesn’t seem like such a daunting task. Just be sure that you are patient and collect all the paperwork. Remember it is better to extend than amend. If you feel like you haven’t gotten all your paperwork or won’t get it in time. Just ask your tax professional to file an extension.
With all your documents in hand you are now prepared to drop them off. One final piece of advice comes from Chuck Rettig, who is the current Commissioner of the Internal Revenue Service (IRS).
“We urge people to carefully review their taxes for accuracy before filing. And they should file electronically with direct deposit if at all possible; filing a paper tax return this year means an extended refund delay." (Chuck Rettig, 2022).
There you have it, straight from the horse's mouth; it is more advantageous to setup direct deposit. The IRS is under a lot of pressure with things like staffing issues and an enormous amount of tax returns coming in. Do them and yourself a favor by double checking you have all your paperwork, accuracy and electronically filing this year.
IRS.gov, January 24, 2022, accessed February 2, 2022. IRS begins 2022 tax season; urges extra caution for taxpayers to file accurate tax returns electronically to speed refunds, avoid delays.