Make filing your 2022 tax return easier: here are simple steps that you should take to make it happen.
The Internal Revenue Service (IRS) encourages you to take simple actions before the end of the year to make your 2022 tax return filing easier. To approach the upcoming tax season with confidence, the federal tax agency recommends the following:
GATHER YOUR TAX RECORDS
You’ll be in the best position to file an accurate return and avoid processing or refund delays or receiving IRS letters if you gather and organize all your tax documentation.
- Develop an electronic or paper recordkeeping system to store your tax-related information in one place for easy access.
- Review the financial transactions that occurred in 2022 to determine whether they’re subject to tax and how you should report them on your tax return.
- Make sure that your employer, bank, brokerage account manager has your current mailing address and email address. This will help ensure that you receive your year-end financial statements in a timely manner. Usually, year-end forms start arriving by mail or are available online in mid-to-late January.
- Review each income statement for accuracy and contact the issuer to correct information that needs to be updated.
PREVIEW TAX CHANGES
Tax Withholding Estimator
Use the Tax Withholding Estimator on IRS.gov to determine whether you need to adjust your withholding, consider additional tax payments, or submit a new w-4 form to your company’s HR team to avoid an unexpected tax bill when you file your tax return.
Example: you get married, divorced, welcome a child, or take on a second job. The Tax Withholding Estimator will help you determine the right amount of tax that needs to be withheld from your paycheck.
- Payment on account: consider making estimated tax payments due to non-wage income from unemployment, self-employment, annuity income or digital assets. January 17, 2023 is the due date of the last quarterly payment for 2022.
- Taxable income: remember that most income is taxable including unemployment income, refund interest and income from the gig economy and digital assets sale. Report the income that you earned, including from part-time work, side jobs or the sale of goods. If you’re doing business, you will receive Form 1099-K if a third-party payment network processes payment for you for more than $600. If the 1099-K reflects income that you didn’t earn, call the issuer to have it corrected.
- Non-taxable income: Remember that money that you received through third-party payment applications from friends and relatives as personal gifts or reimbursements for personal expenses is not taxable.
Interactive Tax Assistant
Use the Interactive Tax Assistant on IRS.gov to determine your eligibility for tax credits. Credit amounts like the Child Tax Credit (CTC), Earned Income Tax Credit (EITC) and Child and Dependent Care Credit (CDCC) change each year.
In 2023, these tax credits return to their 2019 levels. As a result, if you’re usually eligible for these credits, you will likely receive a significantly smaller refund compared with the previous tax year.
Example 1 – CTC: if you got $3,600 per dependent in 2021 for the CTC and are eligible for that credit in 2022, you’ll get $2,000 per dependent.
Example 2 – EITC: if you had no children and received roughly $1,500 in 2021, you will get $500 in 2022.
Example 3 – CDCC: if you received in 2021 $8,000 of CDCC, which is the maximum amount in 2021, the maximum amount that you will receive in 2022 is $2,100.
Check whether you qualify for the temporarily expanded eligibility for the Premium Tax Credit, the Clean Vehicle Credit.
TAX REFUNDS
- No Stimulus Check Payment: your 2023 tax refund may be smaller than before because you’ll not receive any Economic Impact Payments for 2022.
- Charitable contributions: if you don’t itemize deduct and take the standard deduction, you won’t be able to deduct your charitable contributions. Last year, you were authorized to deduct a maximum amount of $300 ($600 if you were married and filed jointly) for charitable contributions if you didn’t itemize deduct.
- Don’t rely on refunds to make investments: the IRS suggests you do not rely on receiving a 2022 federal tax refund by a certain date, for instance to make major purchases or to pay bills. Your tax return may require additional review and it may take longer to process the refund.
Example: Your return may be selected for further review to prevent and detect identity theft. If you’re claiming the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC), the IRS cannot issue your refunds before mid-February. The IRS needs time to prevent and detect fraud.
- Get your refund faster: you should prepare to file your tax return electronically and choose a direct deposit to get your refund fast. You should choose a direct deposit even when filing a paper tax return. If you don’t have a bank account, you should review the FDIC website for information on opening an account online.
- Expiring tax ID numbers: if the IRS assigned an Individual Tax Identification Number (ITIN) to you, you should ensure that your ITIN hasn’t expired before filing a 2022 tax return. You should submit a Form w-7, Application for IRS Individual Taxpayer Identification Number now to renew your ITIN. Your refunds could be delayed in 2023 and you may not be eligible for certain tax credits if you fail to renew your ITIN before filing your tax return next year.
Individual income tax returns are the main returns that the IRS processes. As of October 28, 2022 the IRS received 164 million individual income tax returns that pertain to the 2021 tax year. The federal tax agency issued 109 million refunds for a total amount of $345 billion. The average amount of the refund is $3,253.