2021 Tax Season is officially over! You definitely deserve to embrace that relief that one of the most stressful times of year is over. 2021 saw a great deal of backlogs, delays, and IRS staffing issues, which some analysts are saying is a trend that will likely continue in the 2022 tax year. Early filing is going to be your friend, which means thinking ahead!
It’s never too early to start preparing for the coming tax season. Starting early can save you time, stress, headaches, and even money.
Here are 10 Ways You Can Prepare for the 2022 Tax Year
#1 – Know Your Tax Bracket
There have been some changes to tax brackets from 2021 to 2022 that could impact your finances and your tax strategy. Take a look at the 2022 vs 2021 Tax Brackets, identify your likely tax rate, and start planning for how you will make the most of the tax brackets you are in. For example, if you fall at the bottom range of one bracket, you may be able to make a big purchase for your company or put more money in your 401k to lower your tax burden. Knowing your tax bracket is the first step to developing a solid tax strategy for 2022.
#2 – Mark Filing Deadlines and Due Dates on Your Calendar (and set reminders!)
Whether you are a W2 employee filing as an individual with no dependents or a business owner filing married with many dependents, you will have due dates and deadlines! Take some of the stress out of filing season by marking these dates on your calendar and planning ahead.
To make this easy, we’ve put together the full list of 2022 Tax Due Dates and Deadlines you can bookmark and return to.
#3 – Develop Your Tax Strategy Early
The earlier in the year you develop your tax strategy, the better. This gives you ample time to open any counts, make any additional contributions, or consider any new purchases or entity structure changes. We are already into Q2 of the 2022 tax year, and to save you the Q4 and tax season stress, develop a tax strategy early with a clear path forward that you can follow. This will help you avoid surprises.
#4 – Schedule a Tax Planning Meeting with Your CPA
Tax strategy and planning should always be done with your CPA, and your CPA will be grateful that you are thinking ahead. In your tax planning meeting, be sure to come to the table with any questions you have, what you would like to do differently in 2022, and any changes you expect to make that will impact your taxes and filing.
If you are our client, you can contact us any time to get a jump start on 2022 tax planning.
#5 – Open Any Accounts and Set Up any Recurring Deposits Your CPA Recommends
Setting up retirement accounts and contributions always takes longer than you think. Don’t wait until the end of the year to set these things up! Once you’ve met with your CPA you will likely have a list of to-do’s to start implementing your 2022 strategy. Take care of these checklist items as soon as you can.
#6 – Make an Entity Changes or Filings ASAP
Maybe you’re switching from an LLC to a Corporation, or just need to file your Annual Report to stay in good standing in your state. If any of these changes or yearly filings are required, and especially if your entity structure is changing, you’ll want to get this taken care of early to fully reap the benefits.
#7 – Develop an Organized System for Any Forms or Receipts
Organization is your friend in the long run, and your CPA will appreciate your attention to detail. An organized system takes the headache out of ANY tax season. When you know exactly where your documents are, what your circumstances are, and what you need, anything that comes up can be easily handled. When it comes to taxes, surprises are rarely, if ever, your friend. Getting in the habit of using an organized system for tax related documents (that you can follow year-over-year) makes tax planning a habit, all the benefits of which you’ll be reaping when you go into Q1 2023 with no stress!
#8 – Organize Your Information Quarterly
If you are a business entity, organizing your information quarterly and paying your estimates will keep you in good standing, help you avoid fines and penalties, and ensure that you aren’t spending December scrambling to add more deductions, make extra contributions to retirement accounts, trying to backtrack 12 months of mileage, and worst of all, going back through that mountain of receipts to organize your expenses.
By gathering all of your information and organizing it quarterly, you stay on top of it. Of course, best case scenario is logging mileage, expenses, etc. as-they-happen, but devoting a little bit of time every quarter to tax preparation makes that end of the year filing so much easier.
#9 – If You Work With a CPA, Get Them The Information They Need Early
There’s nothing a CPA appreciates more than a client who understands the importance of providing accurate information as soon as it is available. Adhering to your CPA’s terms for sharing documents, and taking care to ensure they receive information on time can make for a much easier tax season.
#10 – Commit to Staying On Top Of It
2022 is a great year to commit to thinking about (and stressing about) your taxes less! Committing yourself to a solid tax strategy and following through on your plans is the surest way to make the 2022 tax season less stressful than last year.
Feeling nervous and unsure about what to expect? Contact your CPA and ask what you can do to make this tax season your best yet!
