January 31, 2022
Tax season is here! Filing your taxes can be a confusing and stressful process, but unfortunately there’s no (legal) way around it. We can’t promise that filing your taxes will be fun, but these tips will hopefully help you make it to April 18 with fewer gray hairs.
- Know what tax documents you need to file. You’ll save time by gathering all the documents you need in advance. Depending on your filing status and situation, you may need several different forms but the most common are W-2’s, 1099s, receipts, and other income documents. Click here for more information on tax forms and the personal documents you’ll need.
- Know your filing options. The IRS suggests filing online to help avoid filing mistakes. The IRS’s Free File Tool and other online services like, TurboTax, make filing online simple! If you prefer to file a paper tax return by mail, be sure that you address it correctly, use correct postage and that your return is postmarked by April 18, 2022.
- Know your filing status. Familiarize yourself with the different “filing status” options available. Your filing status is typically dependent on your marital status, but more than one filing status may apply in certain situations. Use the IRS Interactive Tax Assistant to help determine your status. Your filing status is important because it determines several things such as:
- If the taxpayer is required to file a federal tax return.
- If they should file a return to receive a refund.
- Their standard deduction amounts.
- If they can claim certain tax credits.
- The amount of tax they owe.
- Understand the difference between standard and itemized deductions. The IRS gives you two options when filing your taxes: Standard or Itemized deductions. You’ll want to choose the option that gives you the lowest overall tax. Recently, there have been changes in tax law, including increases to the standard deduction, that may make it beneficial for people who typically choose itemized to switch to a standard deduction. You can find helpful information on the two types of deductions here.
- Don’t forget to report any unemployment benefits you received. The last couple of years have been unique with a high number of people receiving unemployment and stimulus checks due to the pandemic. Unemployment benefits ARE taxable and should be included on your federal tax return. Economic Impact Payments, or stimulus checks, are not taxable and don’t need to be included in your gross income.
- Be diligent in protecting your personal information. Tax season will bring out the scammers! The IRS has recently warned that scammers continue to make threatening sounding phone calls posing as IRS agents in hopes of stealing taxpayer money or their personal information.
- Consider direct deposit for your refund. Direct deposit is the fastest, safest and most convenient way to receive a tax refund. Not only will you receive your money more quickly than receiving a check in the mail, but you also eliminate the possibility that a paper check will be lost or stolen in the mail. Be certain that you enter the correct routing and account number when using direct deposit to avoid delays. You should consider depositing your tax refund into your savings account—what a great way to start the year off with a jump start on your savings goals!
Our team at First United Bank is here to help you make smart decisions when it comes to your money and as always, we’ve got your back. Happy filing!