It’s officially tax season. So, if you haven’t filed yet, you need to jump on this responsibility as soon as possible. Here are some tips that will help you get ready for the annual task:
Know Your Deadlines
The IRS started accepting 2021 tax returns on January 24th, 2022. If you have yet to file, don’t worry — you have until April 18th to file your return. Residents of Massachusetts and Maine will have until April 19th to do this.
Don’t wait until the deadline to get started. The sooner that you file, the faster that you can receive a return.
You don’t want to miss the deadline for filing your federal income taxes. If you miss this deadline, you will be charged a failure-to-file penalty.
Before you get started on filing, you’ll want to organize all of your essential documents. Your workplace should have already sent out Form W-2 wage statements to their employees. Other than your W-2, here are some other documents that you will want to have on hand.
- Forms 1099: these forms report non-employment income, like cash dividends, payouts from pensions, prizes and unemployment benefits.
- Forms 1098: these forms report mortgage interest paid for the year.
- Letter 6419: this letter will help you reconcile Child Tax Credit payments.
- Letter 6475:this letter can help eligible recipients claim the Recovery Rebate Credit.
Don’t Miss Your Payments
When you fail to make your tax payments on time, your outstanding payment will start to accrue interest and collect penalties. The longer that you wait to make your payment, the more you will owe. Eventually, you could face serious consequences from the IRS for failing to pay your taxes. They could seize your assets or garnish your wages.
What can you do if you can’t make your payments on time? You can apply for an installment agreement through the IRS — this will let you make set monthly payments to whittle down the total that you owe.
Budget for Payments
Before you sign up for an installment plan, see whether you can rework your budget to save up enough funds for your tax payments by the deadline. A little bit of scrimping and saving could help you!
One important thing to know about budgeting is that you shouldn’t put all your savings toward one goal. You want to leave yourself a little bit of wiggle room so that you can handle any surprise expenses—this is especially important when you don’t have an emergency fund to dip into.
If you ever make this budgeting mistake, you have some options to cover an emergency expense quickly. You could use your credit card and then pay down the balance later. Or you could apply for a loan online and see whether you get approved. Make sure to look for loans that are specifically available in your state. So, if you live in New Orleans, you’ll want to search for online loans in Louisiana for emergency help. Otherwise, you could waste your time applying for an option that’s unavailable in Louisiana.
Think about Convenience
This year, file your taxes electronically. It will be easy for you to complete, and you won’t have to worry about delays in mailing. You should request a direct deposit when it comes to your tax return. This way, you’ll access those funds faster.
Tax time can be very stressful, but you can minimize your stress by following these simple tips. It’ll be over before you know it.