TAX TIPS

‘Tis

the (Tax) Season!

Get ready to file with these tips:

Families May See Smaller Refunds

The Child Tax Credit, Earned Income Tax Credit, and Child and Dependent Care Credit were temporarily increased in 2021 through the American Rescue Plan in response to COVID-19, but in 2022 they went back to their former amounts so families may feel a pinch.

Find Your Best Filing Method

Paper-filing your return may lead to delays due to IRS backlog so it’s best to e-file, whether through software or a tax preparer. Most simple returns can be filed without professional help through TaxAct or similar, but more complicated returns can benefit from the work of an EA, CPA, or other tax preparer.

Consider an Extension

If you’re still waiting on documents to come in or if you want extra time to make a decision on contributing to retirement you have until Tax Day to apply for an extension to file. Be aware: it’s an extension of time to file, not to pay—so if you think you owe, you should pay in an estimated amount with the extension request.

Buy Savings Bonds

Series I U.S. savings bonds became a hot item in 2022 due to their high interest rates, but purchases are capped at $10,000 per person per year. An exception to this limit is an allowance to purchase up to $5,000 in paper I bonds with your tax refund by filing Form 8888 with your tax return.

Plan Now for Next Year

If your refund or tax bill was a surprise this year you may be over- or under-withholding on your wages; adjusting your W-4 now could save you another headache next year. If you have significant non-wage income (capital gains, for instance) it may be worth getting set up to make estimated tax payments during the year.