With new tax breaks and credits to consider, filing your taxes just got a little more complicated. If paying your taxes seems more challenging than usual, here are a few handy tips that can help.
Begin Early
This year, IRS employees will answer many questions about the new filing requirements, which means delays are inevitable. Get ahead of the rush by e-filing and setting up a direct deposit with the IRS. This will cut down on mail delays. It also helps to find a tax professional who can help you smooth out discrepancies before the deadline.
File Accurate Returns
Your tax return is matched to W-2 forms from your employer, 1099s from clients, banks, or investment companies, and data from the government. The IRS flagged anything that fails to match up to this data and goes through a manual review or audit. Make sure you check your returns against the documents the IRS has on file.
Schedule Time for An Extension
If you’re struggling to gather the documentation you need before the tax deadline, file an extension to move your deadline further down in the year. This buys you more time, but you should also try to pay what you owe as soon as possible.
Take Advantage of Last Year’s Child Tax Credits
If you’re a parent, you may have been eligible for child tax credits last year and should have already received half of your credits. This year, you can claim the other half by using Schedule 8812. Make sure your numbers match up with IRS information by using IRS Letter 6419 or looking through your tax transcript.
Find out Whether You Can Claim Recovery Rebate Credit
If you still didn’t receive your third stimulus payment in 2021, you may be eligible for Recovery Rebate Credit. Check your IRS Letter 6475 or your tax transcript to find out if you’re eligible.
Gig Work Counts as Taxable Income
Any income you earn from a gig, however small and part-time, is taxable. So, whether you drove for a delivery app or ran a doggie day-care for your neighbors, you must report it under Schedule C: Profit or Loss from Business.
