Seven Thoughts on Filing Your Tax Return
Updated: Jan 4
First off, I know, yesterday was April 15th. So why the article on April 16th? Simple! The IRS extended the due date to April 18th, so for all you real hard-core procrastinators out there, you didn’t miss it, you still have plenty of time to file on time. Go ahead and put off preparing your tax return until Sunday night or even Monday.
Here are some tips on making sure you prepared your return correctly.
First, check the social security numbers on your W-2s, W-2Gs, 1099s, and schedule K-1s. If your social security number is incorrect, the IRS computer will not be able to match that information to what you put on your tax return. This could cause any refunds you were expecting to be help up or even changed.
Second, look at last year’s tax return to see if you are missing anything. Itemized Deductions same? Expenses on self-employed activity same? Rental expenses the same? Did you forget about an interest account or dividend account?
Third, can you still take an IRA deduction? Were you covered by an employer retirement plan? Is your total income low enough? If you qualify, you can still open an account and fund it by April 18th.
Fourth, did you make any charity contributions last year. Even if you don’t itemize and just take the standard deduction, you can deduct $300 ($600 for married couples) on the face of your return.
Fifth, did you get your stimulus payment in March 2021? Did you get any Advance Child Tax Credit payments (Aug-Dec 2021)? Make sure you report these when computing your refund. If you didn’t get these, you can get them when you file your return. If you did get these, then you don’t get them again when you file your return. Get either of these wrong and the IRS will hold up your refund and eventually send you a corrected tax computation.
Sixth, report all Crypto-currency sales. Heaven help you in trying to come up with a basis for your sales. I know a smart IRS agent who likes to own Cryptos. Even he has trouble figuring out his cost. If you own Cryptos but didn’t sell any, make sure you check the special box informing the IRS of that.
Seventh, print out or create a PDF of your entire tax return before sending it off. You should have a special storage place for all your prior tax returns. Never throw away a tax return. You can throw away backup documentation after 7 years.
If you can file using e-file, do it! General rule now is NEVER mail anything to the IRS anymore. Their mail room is broken with no end in sight. Especially, do not mail any checks to the IRS. If they get it, you still run the risk of the data entry person coding it wrong. Instead, use the IRS online Direct Pay system.
Have you heard? Prov 14:22b says, “But love and faithfulness belong to those who plan good.”
Kelly Bullis is a Certified Public Accountant in Carson City. Contact him at 882-4459. On the web at BullisAndCo.com Also on Facebook.