By Matthew Gaude & Shawn McGuire
Tax season is here. It can be a stressful time as you work to get your financial ducks in a row. The good news? There are some steps you can take to make it more manageable. One of the best ways to make sure you don’t miss anything important is to follow a checklist to help you get organized.
We at Live Oak Wealth Management have created a tax-preparation checklist to help you easily track what’s been done, and what still needs to be done, so nothing slips through the cracks. Once you have all the necessary documents, you can upload them to your tax-preparation software, and you’re all set. We invite you to utilize the following checklist to get you moving in the right direction.
Organize Your Personal & Income Information
You’ll start receiving various tax documents virtually or in the mail soon, so instead of letting them sit in a pile on your counter, create an organized system for the following.
Income Information
- Form W-2: These are issued by employers and show your wages and tax withholdings. They are supposed to be mailed by January 31.
- Form 1099-MISC: These report income you have received as an independent contractor or freelancer. You should receive one from each person or company that pays you.
- Form 1099-INT: This form will show any interest you have earned.
- Form 1099-R: This form reports income received from annuities, IRAs, or pensions.
- Form 1099-DIV: Any dividend income you earn is reported on this form.
- Form 1099-B or 1099-S: You will receive these if you have any income from the sale of property or stock.
- Form 1098: You will get this from your mortgage company reporting the interest that you paid.
- Form 1098-T: This reports payments of qualified tuition and expenses.
- Form 1095-A or 1095-C: These forms report your healthcare coverage for the year and your premium tax credit, if applicable.
- Schedule K-1 (Form 1065, Form 1120S, or Form 1041): This reports income for a partner, a shareholder, or an income beneficiary of an estate or trust. The Schedule K-1 normal deadline can be as late as April 15th.
Income-Reduction Documents
- Form 1098-E for student loan interest paid, or loan statements for student loans received
- Form 1098-T for tuition paid or receipts from the institution you or your dependents attend
- Receipts for any qualifying energy-efficient home improvements
- Records of IRA contributions made during the year
- SEP, SIMPLE, and other self-employed pension plan information
- Records of medical savings account (MSA) contributions
- Moving expense records
- Self-employed health insurance payment records
- Alimony you paid if your divorce was finalized before December 31, 2018
Personal Information
If you want your tax-filing experience to be painless, you’ll also want to make sure that you have all of your and your dependents’ personal information available, such as:
- Social Security numbers and birth dates
- Copies of last year’s tax return (helpful, but not required)
- Bank account number and routing number, if you wish to have your refund deposited directly into your account
Gather Documents for Itemization
If you’re planning to itemize your deductions this year, you’ll need records to include your totals and provide proof.
Deductions and Credits
- Childcare costs: provider’s name, address, tax ID, and the amount paid
- Education costs: Form 1098-T, education expenses
- Adoption costs: SSN of the child; records of legal, medical, and transportation costs
- Form 1098: Mortgage interest, private mortgage insurance (PMI), and points you paid
- Investment interest expenses
- Charitable donations: cash amounts and official charity receipts
- Medical and dental expenses paid
- Casualty and theft losses: the amount of damage, insurance reimbursements
- Records/amounts of other miscellaneous tax deductions: union dues; unreimbursed employee expenses (uniforms, supplies, seminars, continuing education, publications, travel, etc.)
- Records of home business expenses
Taxes Paid
- State and local income tax
- Real estate tax
- Personal property tax
Updates for the 2022 Tax Year
There are some important changes to keep in mind when filing your 2022 tax return. There are several tax credits that will be returning to 2019 levels after being temporarily expanded in 2021 due to the COVID-19 pandemic. Some taxpayers may receive significantly smaller refunds due to these changes.
- The Child Tax Credit will return to $2,000 per dependent in 2022, down from $3,600 per dependent in 2021.
- The Earned Income Tax Credit will return to $500 (down from $1,500) for eligible taxpayers with no children.
- The Child and Dependent Care Credit will max out at $2,100 in 2022, down from a maximum of $8,000 in 2021.
Stay on Top of Tax Changes
Those lists cover the details of what you’ll need in front of you to thoroughly fill out your tax return. But there are also a few things to think about that could impact how you file, such as any changes that have occurred this year. Did you add another child to your family? Did one of your children start college? Did you start taking withdrawals from a retirement account? All these changes need to be reflected on your tax return but won’t show up on prior returns.
Specifically, you should stay on top of annual changes to retirement plan contribution limits. For the 2022 tax year, you can put up to $6,000 in any type of IRA. If you are over age 50, that amount goes up to $7,000 thanks to the $1,000 catch-up contribution. Annual contribution limits for 401(k)s, 403(b)s, and most 457 plans are $20,500. If you are 50 or older, your yearly contribution limit goes up to $27,000. And if you are eligible to contribute to an HSA, you can save $3,650 if you have single medical coverage and $7,300 if you are covered under a qualifying family plan. If you are 55 or older, those limits go up another $1,000. Keep in mind that for IRAs and HSAs, you have until April 18th, 2023, to contribute for the 2022 tax year.
A knowledgeable financial professional can help you understand any tax law changes and how they affect you.
Make the Most of Your Future
It’s true that filing taxes can seem overwhelming, especially with all the new changes due to the pandemic. However, the more you understand the tax process, the better you are able to take advantage of available deductions. Doing your own research and talking to a tax professional can help you get the most out of your tax return. It’s important to take the time to look at the bigger picture of taxes and utilize the appropriate tools.
Working with a trusted financial advisor can be helpful when trying to become aware of the opportunities available to you. An experienced financial professional can help you create a comprehensive plan that takes into account your overall goals and financial objectives. With their expertise and knowledge of tax laws, they can provide strategic advice on tax planning that can help you make more informed decisions and create a strategy that is tailored to your unique situation.
If you’re ready to be proactive about tax planning and you don’t yet have a trusted advisor, we at Live Oak Wealth Management would love to help you experience confidence in every aspect of your financial plan. Set up an appointment today by calling our office at 770-552-5968 or email [email protected]. Or, if you prefer, you can simply click here to schedule an appointment online.
About Matthew
Matthew Gaude is an *investment advisor representative and the co-founder of Live Oak Wealth Management, a financial services firm in Roswell, Georgia. He serves the planning and investment needs of corporate employees, those approaching or in retirement, and 401(k) plan sponsors. Working first as a commodity broker and then as a Business Development Manager for a national broker-dealer in previous jobs, he has the insight and experience to help clients understand the complexities of the market and implement strategies to minimize risk. To learn more about Matthew, connect with him on LinkedIn or visit www.liveoakwm.com.
About Shawn
Shawn McGuire is a financial advisor and the co-founder of Live Oak Wealth Management, a financial services firm in Roswell, Georgia. He serves the planning and investment needs of corporate employees, those approaching or in retirement, and 401(k) plan sponsors. He has worked in financial services since 2002 in positions ranging from financial advisor to stock broker and portfolio manager. As a CERTIFIED FINANCIAL PLANNER™ professional, he is trained to help clients with virtually all their financial needs. To learn more about Shawn, connect with him on LinkedIn or visit www.liveoakwm.com.
Securities offered through American Portfolios Financial Services, Inc., member FINRA/SIPC. Investment advisory services offered through *American Portfolio Advisors, Inc., a SEC Registered Investment Advisor. Live Oak Wealth Management, LLC is independently owned and not affiliated with APFS or APA.
Any opinions expressed in this forum are not the opinion or view of American Portfolios Financial Services, Inc. (APFS) or American Portfolios Advisors, Inc. (APA) and have not been reviewed by the firm for completeness or accuracy. These opinions are subject to change at any time without notice. Any comments or postings are provided for informational purposes only and do not constitute an offer or a recommendation to buy or sell securities or other financial instruments. Readers should conduct their own review and exercise judgment prior to investing. Investments are not guaranteed, involve risk, and may result in a loss of principal. Past performance does not guarantee future results. Investments are not suitable for all types of investors. Seek tax advice from a tax professional. Neither APFS nor its Representatives provide tax, legal or accounting advice.