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Andrea Price, TAP member representing Ohio
The Truth Contributor
Thank you for your support for the past three years as I represented the State of Ohio. This is my last article. You may still provide suggestions for how the IRS can improve by contacting one of the following: Call toll-free at:1-888-912-1227 or visit the website: www.improveirs.org.
Easy steps taxpayers can take now to make tax filing easier in 2022
IR-2021-217, Nov. 8, 2021
The Internal Revenue Service (IRS) encourages taxpayers, including those who received stimulus payments or advance Child Tax Credit payments, to take important steps this fall to help themselves file their federal tax returns in 2022.
Planning ahead can help people file an accurate return and avoid processing delays that can slow tax refunds.
Gather and organize tax records
Organized tax records make preparing a complete and accurate tax return easier. It helps avoid errors that lead to processing and refund delays. Individuals should have all their tax information available before filing to ensure the return is complete and accurate. They should notify the IRS if their address changes at https://www.irs.gov/faqs/irs-procedures/address-changes. Notify the Social Security Administration at ssa.gov of a legal name change.
Remember, most income is taxable. Visit https://www.irs.gov/taxtopics/tc305. Recording keeping for individuals includes
- Form W-2 (s) from employer(s)
- Forms 1099 from banks, issuing agencies and other payers, including unemployment compensation, dividends, distributions from a pension, annuity or retirement plan
- Form 1099-K, 1099-MISC, W-2 or other income statement for workers in the gig economy
- Form 1099-INT or interest received
- Other income documents and records of virtual currency transactions. Income documents can help individuals determine if they’re eligible for deductions or credits. Visit https://www.irs.gov/businesses/small-businesses-self-employed/virtual-currencies. Additionally, people who need to reconcile their advance payments of the Child Tax Credit and Premium Tax Credit will need their related 2021 information. Those who received third Economic Impact Payments and think they qualify for an additional amount will need their stimulus payment and plus-up amounts to figure and claim the 2021 Recovery Rebate Credit. Taxpayers should also keep end of year documents including:
- Letter 6419, 2021 Total Advance Child Tax Credit Payments, to reconcileadvance Child Tax Credit payments
- Letter 6475, Your 2021 Economic Impact Payment, to determine eligibility to claim the Recovery Rebate Credit
- Form 1095-A, Health Insurance Marketplace Statement, to reconcile advance Premium Tax Credits for Marketplace coverage
- Taxpayers who have an Online Account may: Online Account securely provides tax account information on IRS.gov; helps provide important filing information
- Eligible individuals claiming a 2021 Recovery Rebate Credit can log in to their online account to see their Economic Impact Payment amounts so they can accurately claim the credit when they file.
- Taxpayers who access Online Account can securely gain entry to the Child Tax Credit Update Portal to see their payment dates and amounts.Taxpayers will need this information to reconcile their advance Child Tax Credit payments with the Child Tax
- Credit they can claim when they file their 2021 tax returns.
- Access Child Tax Credit Update Portal for information about their advance Child Tax Credit payments
- Approve or reject authorization requests from their tax professional
- Update their email address and opt-out/in for selected paper notice preferences
Want a faster refund? Getting banked speeds tax refunds with direct deposit
Direct deposits at irs.gov/refunds/direct deposit gives individuals access to their refund faster than a paper check. Those without a bank account can learn how to open an account at an FDIC insured-banks at fdic.gov or through the National Credit Unit Locator Tool at mycreditunion.gov.
Veterans should see the Veterans Benefits Banking Program (VBBP) at benefits.va.gov for access to financial services at participating banks.
Well-organized records make it easier to prepare a tax return and help provide answers if your return is selected for examination or if you receive an IRS notice.
You must keep records, such as receipts, canceled checks, and other documents that support an item of income, a deduction, or a credit appearing on a return as long as they may become material in the administration of any provision of the Internal Revenue Code, which generally will be until the period of limitations expires for that return.
Period of limitations for assessment of taxes owed:
3 years – For assessment of tax you owe, this period is generally 3 years from the date you filed the return. Returns filed before the due date are treated as filed on the due date.
No limit – There’s no period of limitations to assess tax when you file a fraudulent return or when you don’t file a return.
6 years – If you don’t report income that you should have reported, and it’s more than 25% of the gross income shown on the return, or it’s attributable to foreign financial assets and is more than $5,000, the time to assess tax is 6 years from the date you filed the return.
Period of limitations for refund claims:
The later of 3 years or 2 years after tax was paid – For filing a claim for credit or refund, the period to make the claim generally is 3 years from the date you filed the original return (or the due date for filing the return if you filed the return before that date) or 2 years from the date the tax was paid, whichever is later.
7 years – For filing a claim for an overpayment resulting from a bad debt deduction or a loss from worthless securities, the time to make the claim is 7 years from when the return was due.
Property Records
Keep records relating to property until the period of limitations expires for the year in which you dispose of the property in a taxable disposition. You must keep these records to figure your basis for computing gain or loss when you sell or otherwise dispose of the property.
Healthcare Insurance
You should keep records of your own and your family members’ health care insurance coverage. If you’re claiming the premium tax credit, you’ll need information about any advance credit payments you received through the Health Insurance Marketplace and the premiums you paid.
Business Income and Expenses
If you’re in business, there’s not a required method of bookkeeping you must use. However, you must use a method that clearly and accurately reflects your gross income and expenses. The records should substantiate both your income and expenses. If you have employees, you must keep all your employment tax records for at least 4 years after the tax becomes due or is paid, whichever is later.
Additional IRS Resources
Publication 15, (Circular E), Employer’s Tax Guide
Publication 583, Starting a Business and Keeping Records
Publication 463, Travel, Entertainment, Gift, and Car Expenses