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​Hoods Tax &
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​​​THE INFORMATION IN THIS BLOG IS INTENDED TO PROVIDE GENERALIZED INFORMATION DESIGNED FOR A BROAD SEGMENT OF THE PUBLIC; IT IS NOT PERSONALIZED TAX, INVESTMENT, LEGAL OR OTHER BUSINESS AND PROFESSIONAL ADVICE. YOU SHOULD ALWAYS SEEK THE ASSISTANCE OF A PROFESSIONAL WHO KNOWS YOUR PARTICULAR SITUATION FOR ADVICE ON YOUR TAXES, YOUR INVESTMENTS, THE LAW OR ANY OTHER BUSINESS AND PROFESSIONAL MATTERS THAT AFFECT YOU AND/OR YOUR BUSINESS. ​

Everything You Need For A Successful 2022 Tax Day

3/29/2022

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Hello, readers! Welcome back to the Hoods Tax & Accounting blog! If this is your first time here, welcome! We’re delighted to be able to share up-to-date information about taxes, bookkeeping, and accounting. Our blog is also dedicated to educating you about tax-advantaged savings accounts, tax provisions, programs, and more! We aim to provide you with the tools needed to meet your short and long-term goals. Our seasoned professionals are experts on the tax code, eligible deductions, and QuickBooks—all necessary fundamentals for saving you money! The Hoods Family has been around since 1988 and our comprehensive accounting and tax planning services are among the best in the Lowcountry. If you’re in need of tax preparation, accounting, QuickBooks training, or business consulting services, do not hesitate to schedule an initial consultation! We are officially in tax season, and Tax Day is fast approaching. We recommend preparing early to maximize your savings and refund. We do offer contactless services using a combination of over-the-phone consultations and digital drop-offs, for safety and convenience. You can read more about our hours and submit a request for a meeting using our website!

As we close out the month of March and enter April, Tax Day is only a few weeks away! That’s right, Tax Day is April 18! Are you prepared? No worries if not– You still have some time. If you need help filing, don’t hesitate to reach out to us! Our knowledgeable tax professionals are eager to assist you and take some of that stress off your shoulders. We are also available to answer any questions you may have. Keep in mind that we offer a convenient and secure online portal to upload tax documents and review your return, which will save you a trip to our office! In the meantime, let’s get into today’s topic. 

When filing your taxes, there is quite a bit of information as well as a variety of documents that you will need. It can feel a bit overwhelming, but gathering this information ahead of time will save you some stress! Today, we’ll break down everything you’ll be needing in order to have a successful tax day. Let’s get started!

Personal Information

First and foremost, you will need to gather your personal information before filing taxes. Remember: If you are married and filing a joint return with your spouse, you will also need the following information for them as well.

  • Social security number OR tax identification number 
  • Full name as listed on your social security card
  • Date of birth
  • Home address 
  • Bank account number or routing number to receive your refund via direct deposit

All of this personal information tells the IRS and the state you are filing in who is filing a return, how to contact them, and where to deposit the refund. Additionally, you will also want to have a copy of last year’s federal and state tax returns on hand. If you, your spouse, or a dependent has been issued an Identity Protection PIN, you’ll need to provide that as well. 

This year, you will need your IRS Letter 6475 (your Economic Impact Payment) to determine your eligibility for the Recovery Rebate Credit. This letter was issued in January 2022 and provides the total amount of the third Economic Impact Payment received for tax year 2021. If you are married, both you and your spouse should have received your own letter.

Dependent Information

If you are claiming someone as a dependent, you will need their personal information as well. People claiming dependents are usually parents, legal guardians, or caregivers. You will need the following information:

  • Date(s) of birth and social security numbers or tax ID numbers
  • Proof of residency– This can be school records, a doctor’s bill, or other piece of mail with your dependent’s name and address
  • Childcare records with your tax ID number, if applicable
  • The income amount of dependents or other adults in your home
  • If you are the noncustodial parent, you will need Form 8332 showing that the child’s custodial parent is releasing their right to claim a child to you

This year, you will also need IRS Letter 6419. The letter was sent between December 2021 and January 2022 and provides the total amount of 2021 Child Tax Credit (CTC) payments. 

Sources of Income

You may have several different forms documenting the income you received in 2021. You will likely not need all of these forms to file taxes every year, but here are some of the most common ones:

  • W-2 forms from your employer(s)
  • 1099-G forms for unemployment income and state or local tax refunds
  • 1099-R for retirement plan distributions/pension/IRA
  • SSA-1099 for Social Security benefits
  • 1099-MISC for rental property income
  • 1099-B for sales of stock or other property
  • 1099-SA for distributions from a health savings account (HSA)
You should also gather documents from:

  • Expenses related to your investments
  • Gambling income
  • Prizes and awards
  • Trust income
  • Royalty income
  • Jury duty pay
  • Cancellation of debt
  • Transactions involving cryptocurrency 

If you are unsure of exactly which documents you need, contact us today to speak with one of our tax professionals! They are ready to answer any questions you may have.

Types of Deductions

Tax deductions are a reduction of income and are sometimes known as tax incentives. This can reduce the amount of tax you owe or increase your tax refund. There are a variety of tax deductions that you may be eligible for, depending on your circumstances. In order to be eligible for tax deductions, you must meet certain qualifications based on your filing status and amount of your income that is taxable. Here are some of the types of deductions and what documents you will need to provide:

  • Homeownership: Form 1098 or other documents to report mortgage interest, real estate and personal property tax records, receipts for energy-saving home improvements (solar panels, solar water heater, etc.), and all other forms within the 1098 series.
  • Charitable donations: Cash amounts donated to houses of worship, schools, and other charitable organizations, records of non-cash charitable donations, amounts of miles driven for charitable purposes. Charitable donations must be paid in cash or other property before the close of the tax year in order to be deductible.
  • Medical expenses: Amounts paid for healthcare, insurance, and to doctors, dentists, and hospitals.
  • Childcare expenses: Fees paid to a licensed daycare center or family daycare for the care of an infant or preschooler, amounts paid to a babysitter or provider for the care of your child under age 13 while you work, expenses paid through a dependent care flexible spending account at work.
  • Educational expenses: Records of any scholarships or fellowships you received, Form 1098-T from educational institutions, Form 1098-E if you paid student loan interest.

There are other deductions available such as deductions for federally declared disasters, K-12 educator expenses, and retirement and other savings. Talk with a tax professional to determine which deductions you are eligible for.


Tax credits

In addition to tax deductions, there are also tax credits. While deductions reduce the amount of income subject to taxes, credits directly reduce the amount of taxes you owe. One of the most common tax credits this year is the Child Tax Credit, which could get you up to $3,600 per child this year, as part of the coronavirus relief package known as the American Rescue Plan. Many taxpayers received half of the credit as advance monthly payments from July to December 2021. Another is the Recovery Rebate Credit, which can be claimed on your tax return if you did not receive your third stimulus check or received the wrong amount. 

As you can see, there are many documents needed when preparing to file taxes. You may find it helpful to collect and store all of these documents and receipts in a safe place throughout the year, so you can access them easily whenever tax season comes around. We hope you found this article informative, and we thank you for reading. If you have any questions regarding your taxes, or if you still need help filing, contact us! As stated above, Hoods Tax & Accounting offers a variety of services including small business consulting, QuickBooks training, tax preparation, accounting, payroll, and more! Visit our website for more information, as well as helpful links to resources you may find useful. Thank you for reading and we hope to see you back next time to keep learning about various tax and accounting topics!
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