Tax Day is Monday, April 18, 2022: Are you ready?
If not, it is okay, you have some options! IRS Form 4868 is an Application for Automatic Extension of Time to file your Individual Tax Return. This will allow you until October to file your Individual Tax Return. A business entity also has similar forms that may be filed for an Automatic Extension of Time, which extends the March deadline to September. The form utilized depends on your business structure and other case-specific circumstances, but the courtesy still exists.
If you are ready to file, what next? You want to ensure that you have all of your documents to support the amounts claimed on your tax return, otherwise known as a 1040. Have you had any significant life changes since filing your 2020 tax return? Did you get married? Divorced? Did your spouse pass away? Or did you welcome a child? If so, this changes many things for you. For instance, if you got married, then you may be filing a Married Filing Jointly return, as opposed to Single or Head of Household. This also means that your standard deduction is now $25,100, as opposed to $12,550 (Single) or $18,800 (Head of Household). The standard deduction is the amount you can deduct from your taxable income without providing additional proof or information, which is required for itemized deductions. If you had a child, you are now eligible for the Child Tax Credit. It is $3,600 for children under age 6 and $3,000 for children ages 6-17. A tax credit is applied to taxes owed, as if you made a payment toward the amount owed without actually dishing out any cash!
What documents should you have for 1040 preparation? While this list is not exhaustive, here are some “standard forms” that most people need to have:
W2: if you had a job during 2021 and there were federal withholdings, Social Security and Medicare taxes taken out of your gross pay
1099 NEC: if you are considered an Independent Contractor (as opposed to an Employee)
1099-Div: if you received dividends or distributions
1099-Int: if you received interest payments from a bank account
1099-Misc: if you are self-employed and received $600 or more from an individual
1099-R: if you received distributions greater than $10.00 from pensions, annuities, retirement or profit-sharing plans, IRA’s, insurance contracts etc…
1099-g: if you received certain government payments, i.e., Unemployment Benefits
Form 8949: if you recognized gain from cryptocurrencies
Finally, if you sold any Real Property, you would need to report that transaction. Keep in mind that the sale of your main home allows you to exclude up to $250,000 (if Married Filing Jointly, the amount is $500,000) of capital gains from your taxable income.
Good luck, and if you have any questions or concerns, please do not hesitate to contact email@example.com.