Checklist for Year-End Income Tax Filing for the Tax Year 2022
December is approaching quickly, which also means that the tax year for 2022 is very close. You must deal with the results of the numbers as of December 31st in April. It’s crucial to plan, go through your income tax to-do list, and get your company ready for year-end.
Of course, everyone’s winter becomes busy during the holidays and the Q4 rush. There is no better time than the present to compile your tax records and begin working through your end-of-year tax checklist.
Look over our suggestions to prepare for tax season.
Should I File My Taxes?
Priorities come first. Should you file taxes the following year? In the US, filing taxes is not a requirement for everyone every year. You might not need to submit a federal tax return if you meet certain criteria.
If You Are Under 65
If your income is sufficiently low, you might not be required to file a tax return. You typically do not have to file a federal return if you are under 65 and your income is below the following thresholds:
Married couples filing jointly: $25,100
Household head: $18,800
If You Are Above 65
So, if I’m retired, do I still have to submit taxes? If your income is below the following threshold and you are over 65 and not retired, you do not have to file a federal return:
A married couple with a senior spouse: $26,450
Married couples who are both over 65: $27,800
The household’s head: $20,500
Here are the essentials to make sure your finances are in tip-top form as December approaches.
1. Increase Contributions for Retirement
Maximize retirement contributions as the first thing on your year-end tax to-do list. Directly investing your salary in retirement savings will help you lower your taxable income each year. Whether you have a Roth or regular IRA, you can increase your retirement contributions. But you must do so before 2022 expires.
For 2022, you can only contribute a combined total of $6,000 ($7,000 if you’re 50 or older) or, if less, the amount of your taxable income for the year to your regular and Roth IRAs.
2. Increase Contributions to HSAs
You are eligible for a triple benefit opportunity and a health savings account (HSA).
Your taxable income is decreased by HSA contributions, and eligible withdrawals for medical costs are tax-free. Additionally, any investment gain within the account is tax-free.
The following are the updated thresholds for 2022’s tax-deductible HSA contributions:
Before the end of the year, anyone 55 and older can make an HSA catch-up payment of up to $1,000.
3. Increase Your Tax Deductibility
If you haven’t already, choose now whether you’ll take the standard deduction or itemize your deductions for 2022. To maximize your deductions by concentrating them in one year, a frequent technique is to alternate each year.
The following are the most frequent costs listed as itemized deductions:
- Charity Donations
- Home loan interest
- Inheritance tax
- Other non-federal income tax or sales tax costs
- Unforeseen catastrophe losses
You must itemize all of your deductions to claim any charitable contributions for the upcoming tax season. Whatever you decide to do, be sure to keep detailed records of all these expenses and receipts!
4. Pay into 529 Plans
To get the most out of your 529 plan contributions, act now. These programs are aimed at assisting families in putting money down for future educational costs. There are two 529 plans: a prepaid tuition plan and an education savings plan.
These eligible tuition plans are provided by the states, so the options available to you will depend on where you live. The District of Columbia and all 50 states, however, provide at least one of the two choices. Federal tax deductions for 529 donations are not available, although state tax deductions for these contributions can vary.
5. Check IRA Distributions
You should double-check your payouts before the end of the year if you get payments from an IRA or another fund. For the 2022 tax year, you must make sure you don’t go above the appropriate thresholds.
Keep up with your minimum distribution requirements (RMD). The majority of retirement plans now require RMDs after you age 72.
6. Record Tax Deductions for Businesses
Reviewing all of your deductible business expenses is another crucial step in the preparation of your income taxes. Many of your expenses can be claimed and subtracted from your taxable income if you own a small business.
If you wish to include all of these potential costs when you submit your taxes in 2023, keep thorough records of them all and make sure to schedule the costs before the year ends.
Here are a few typical corporate tax deductions:
- Expenditures for meals and travel for work
- Using a car or truck for work purposes
- Charges for the office and supplies
- Tax and accounting software
- Bank account costs related to business
- Accounting and legal services
- Paid self-employment tax and FICA
W-2 Workers, 1099 Workers, and Unemployed People
Depending on your employment conditions, this checklist might change a little. This mostly has an impact on the tax statements form where your income is reported. However, regardless of the forms utilized, all freelance revenue, employee pay, and unemployment benefits are taxable and require reporting.
You cannot claim business costs on your tax return if you are a W-2 employee. Unemployed people may be able to deduct the expenditures of their job search. And business owners and 1099 freelancers may be eligible to deduct business expenses.
The Employer Identification Number (EIN) or Social Security Number must be used to make quarterly estimated tax payments on the income earned by business owners and 1099 independent contractors throughout the year.
Important Dates for the Tax Year 2022
Finally, remember a few important dates as the tax year comes to a finish. You can remain on top of things and breeze through the challenging tax preparation process in early 2023 if you keep track of these dates.
12th of December, 2022: The final day to process business expenses and charitable contributions
15th of January 2023: Estimated tax payment for the fourth quarter of 2022 is due.
31st of January 2023: The deadline for sending W-2s and 1099s to employees by companies
15th of April 2023: Final day to file taxes and make contributions to qualified retirement plans for the tax year 2022
Speak with a Certified Public Accountant
Starting your 2022 year-end income tax checklist now is not too late. You can improve your tax status and make tax season go more easily by starting now. Many opportunities are lost to you as soon as January arrives on the calendar.
Make an appointment with a professional right away if you’re concerned about your tax obligations or if you know you’ll need assistance with your income tax filing preparation. Complete your income tax to-do list with help from the experts from Your Part Time Accountant to make sure you’re ready.