These past couple of tax seasons have been tricky due to the COVID-19 pandemic. This current one is no exception. Here are some quick tips to get you going in the right direction and make sure you are set up for success.
- Get all of your paperwork and receipts in to your accountant on time. If you have all, or almost all of your tax docs, send them in. Don’t hold everything up for one piece of information. To help with your tax preparation, review your tax organizer or last year’s tax return. This will give you a good idea on everything you need to gather and see if anything has changed. If scanning and sending documents, make sure you scan front and back! For Paar Melis current clients, use this link to upload your documents! https://paarmelis.com/upload-tax-documents/
- If you’re an S-corp and the corporation pays your health insurance, it needs to be reflected on your W-2 for that year. Those premiums must be reported as taxable income.
- If you received the Advanced Child Tax credit in 2021, you will receive a letter (6419) with the total amount that you can properly claim on your 2021 tax return. Don’t throw this out! You will need this to complete your 2021 tax return. Unless you opted out, the amount you received will be subtracted from your total child tax credit when you claim it on your 2021 tax return.In addition to the Advanced Child Tax Credit, there have been some changes to the Child and Dependent Care Credit for 2021. If you paid for childcare for a child under the age of 13, or cared for a spouse or other adult that lived with you more than half the year that was physically or mentally incapable of self-care, you may be eligible for this credit. Read more here to see if you qualify: https://www.irs.gov/taxtopics/tc602
- If you received the 3rd stimulus payment in March of 2021, you will receive a letter (6475). Don’t throw this out either! You will also need this to complete your 2021 tax return. And don’t worry, the amount you received will not be part of your gross income. Therefore, you will not include that amount in your taxable income, nor will you pay any income tax on it. This stimulus payment was authorized as an advanced payment for the 2021 Recovery Rebate Credit. You may be eligible to claim this credit on your 2021 Federal tax return if you didn’t qualify for the payment or if you received less than the full amount. Click here to get more info: https://www.irs.gov/coronavirus/third-economic-impact-payment
- Create your IRS Online Account. You can access your federal tax account through a secure logon at https://www.irs.gov/payments/your-online-account. You can view the amount you owe, balance details, tax records, as well as view and make payments. Once you set up access to this, it will streamline getting information to your accountant. See our tax manager Chris talk a bit more about this here: https://paarmelis.com/new-irs-tool-your-online-account/
If you have questions about any of the above, or anything we didn’t mention here, feel free to reach out to us at info@paarmelis.com.
