Merry Christmas and Happy New Year!
The IRS will start accepting income tax returns on: Jan 31, 2022.
Organize your records for tax time
Good organization may not cut your taxes. But there are other rewards, and some of them are financial. For many, the biggest hassle at tax time is getting all of the documentation together. This includes last year’s tax return, this year’s W-2s and 1099s, receipts and so on.
How do you get started?
- Print out a tax checklist to help you gather all the tax documents you’ll need to complete your tax return.
Track paperless records as they come
- Charitable donations
- Outlays for health care
- Gambling winnings and losses
- Property tax expenditures include for your auto.
- Keep all the information that comes in the mail in January, such as W-2s, 1099s and mortgage interest statements. Be careful not to throw out any tax-related documents, even if they don’t look very important.
- Collect receipts and information that you have piled up during the year.
- Group similar documents together
- Make sure you know the price you paid for any stocks or funds you have sold. If you don’t, call your broker before you start to prepare your tax return.
- Know the details on income from rental properties.
Life events you experience
Documents related to life events should all be saved, such as records of:
- death of a spouse
- deductible alimony payment records
- adoption papers
- child custody agreements
A newborn brings joy into your life and potential tax advantages. When you sit down to prepare your return, have these documents for dependent children close at hand:
- Social Security card
- Childcare receipts
- Contributions to college savings plans
Buying a home presents tax-saving opportunities. New homeowners should keep paperwork such as:
- Closing documents
- Home improvement invoices, receipts and proof of payment
- Annual mortgage statement
Itemize your tax deductions
It’s easier to take the standard deduction, but you may save a bundle if you itemize, especially if you are self-employed, own a home or live in a high-tax area.
Itemizing is worth it when your qualified expenses add up to more than the 2021 standard deduction of $12,550 for most singles and $25,100 for most married couples filing jointly.
Many deductions are well known, such as those for mortgage interest and charitable donations.
You can also deduct the portion of medical expenses that exceed 7.5% of your adjusted gross income for 2021.