It never hurts to start planning ahead, especially when financial matters are involved. How often have you had to gather information at the last minute before your taxes are due? Have you ever ended up paying more in taxes than you truly needed to? These professional tax tips for 2022 will help you to get prepared, lower your taxes and avoid any penalties.
Ensure You Have an ID.me Account
Organize Your Information and Obtain Relevant Tax Forms
One of the more obvious tax tips for 2022, organize all relevant information well ahead of time to make filing your taxes easier. While business tax deadlines were extended in 2021, the dates will be back to normal in 2022.
Necessary documentation includes your previous tax return, your current W-2s (for wages paid to employees), 1099s (for reporting non-employment income) and relevant receipts.
You’ll find all necessary tax forms online on IRS’s website.
Understand What Small-Business Tax Deductions Apply to Your Business
Small business owners in Jefferson City, Missouri, may be surprised at how much they can save in taxes when they include all eligible deductions. While the IRS doesn’t provide a definitive list of deductions for small businesses, as the nature of all businesses varies, anything that is necessary and ordinary for you to operate your business is a tax-deductible expense.
Do you rent an office space? Have you converted a room in your house into a home office? Both are eligible for tax deductions. If you use a vehicle for your business, that’s covered too. Other examples include utilities, office supplies, furnishings and equipment, business travel and insurance.
Itemizing all of your deductions, rather than opting for the standard deduction, may result in a saving. Make sure, however, to fully separate business and personal expenses.
Add Funds to Your Retirement Savings
As well as being a smart move for your future, paying as much as possible into your retirement accounts can help you to save on taxes now.
You can qualify for the full yearly IRA deduction if you meet certain criteria. The maximum IRA contribution for 2021 is $6,000 for those under 50 and $7,000 for those above the age of 50. Self-employed people can contribute an additional $58,000 to Keogh and SEP plans.
Note that contributions made to Roth IRA plans are not tax deductible.
Other Top Tax Tips for 2022
- Make sure you include all dependent taxpayer ID numbers when filing your tax return to ensure you remain entitled to any dependent credits.
- If you hire your own minor children to work for you it’s possible to deduct their wages from your personal taxable income.
- Don’t forget to include eligible holiday expenses in your deductibles.
- Make sure you file your tax return on time. If you cannot file on time, obtain an extension with Form 4868 to prevent a penalty. Note: You will need to provide an estimate of owed taxes and make payment for any outstanding balances.
- Pay your taxes on time to avoid costly penalty fees.
- Bonus tax tip for the new year: Focus on building your business and save time and hassle when you get professional tax advice and assistance
Contact Doerhoff & Associates CPA for expert help in preparing for your 2022 tax return. Providing comprehensive accounting services, they’re a trusted solution for many small businesses in Jefferson City.