Everything You Need To Know For Tax Season 2022

Posted by Jim Kantowski, CFP®, CPA on February 23, 2022

Everything You Need To Know For Tax Season 2022

It’s the most wonderful time of the year! No, not the holidays—it’s tax season 2022.

In all seriousness, while tax season is not most people’s favorite time of year, there are a few ways to make it more pleasant. Staying on top of filing deadlines and knowing what documents you’ll need to attach to your tax return can help make the process smoother.

In this guide to tax season 2022, find out individual, partnership, and corporate tax deadlines, how you can prepare to file your return, and what you should consider before you file—either on your own or with the help of an accountant. You’ll be ready for Uncle Sam in no time!

Are you looking for proactive tax planning guidance that fits into your overall financial plan? Schedule a call with Bay Point Wealth to find out how we can help.

Tax Season 2022: Important Dates

Individual Income Tax

When is tax season 2022? Tax season began on January 24. Individuals have until April 18 to file their federal income tax returns for the 2021 tax year (unless you live in Maine or Massachusetts, in which case you have until April 19 to file). Keep in mind that if you want to contribute to any retirement accounts before you file your taxes, you can make Individual Retirement Account (IRA), Roth IRA, and Health Spending Account contributions until April 18. This can give you the opportunity to reduce your taxable income or in the case of a Roth IRA, save money that will grow tax free.

At the state level, individual income tax filing deadlines vary. For example, Maryland extended its deadline for tax season 2022 to July 15 due to the ongoing administrative backlog from the COVID-19 pandemic. This means Maryland residents have three extra months to pay their outstanding taxes. We recommend checking your state government’s website to find out the filing deadline that applies to you.

Corporate Income Tax

Corporate income tax returns are also due April 18. However, if your company is an LLC or has an S Corp tax classification, you’ll need to file by March 15. The income from these companies flows through to your personal tax return on a Schedule K-1. The March 15 deadline is in place to ensure enough time for you to receive a Schedule K-1 form from the business. You’ll then use that form to complete your individual tax return, through which you’ll pay tax on your company’s net income, if any.

Pro Tip: If you have an LLC that income flows through to you, and you have a Simple Employer Pension Plan (SEPP), you can extend your tax return deadline to October 17. This will enable you to delay making payments to the SEPP.

When To Expect Your Tax Refund

Now, the moment you’ve all been waiting for! You can typically expect a federal tax refund within 21 days of filing your return, and a state refund within one to two weeks. However, COVID-19 has been causing significant delays, and taxing authorities are still catching up from the mess of a tax year that was 2020. We recommend finding out the best way to get ahold of your relevant taxing authorities (whether it’s by phone, email, or carrier pigeon), so you know how to correspond with them if there are any issues with your taxes.

In addition, the earlier you file your return, the better chance you’ll have of getting your refund in a timely manner. If you wait until April 18 when many other Americans will be filing their taxes, there will undoubtedly be a higher load of information flowing into the tax system that day—and a lot of folks’ refunds ahead of yours for processing.

How To Prepare For Tax Season 2022

The first step to take when preparing for tax season 2022 is to gather all the documentation you’ll need for your return, including the basics like:

  • Your W-2 for salary earned in 2021
  • 1099s for interest and dividends earned
  • 1099-Bs which report the sales of stocks
  • 1099-Misc. which reports income earned from self-employment or other ways
  • Medical expenses (although you really only need this documentation if you get audited, it doesn’t hurt to gather it now)
  • Mortgage interest deductions
  • Charitable contributions
  • Virtual currency (there is a new question on the tax return this year that requires you to disclose if you bought, sold, or currently own virtual currency)

Everyone’s financial and tax situation is different, so the list of documents you might need for your return could be shorter or longer than what we’ve outlined. If you own an LLC and you hired a contractor—a website designer, for example—to complete work for you in 2021, you’ll need to provide them with a 1099 form and file the form as part of your tax return.

What To Consider When Filing During Tax Season 2022

Your best bet for getting a speedy tax refund is to ensure you don’t leave any questions unanswered about your income or the credits you’re claiming. If your tax return is incorrect or missing relevant documentation, it will prompt back and forth with the Internal Revenue Service (IRS), which will cause delays. Don’t forget to choose the electronic filing option and request direct deposit to avoid dealing with snail mail.

The amount and type of tax credits you claim can also add complexity to your tax return. In the past, individuals claimed credits at tax time. However, due to COVID-19, the federal government advanced the Child Tax Credit in 2021 and gave money to Americans upfront. If you don’t report the credit correctly on your tax return, or you file too early (the IRS did not allow processing of these credits before mid-February 2022), your refund may be delayed. If you received this advanced credit in 2021, keep an eye out for a letter from the IRS about it.

In addition, if you owe previous tax debt, it could complicate tax season 2022 for you. For example, say you receive a notice from your state government indicating that you owe money from 2017. If you have any refund from your 2021 tax return, the government will likely take this money and apply it to the amount owed from 2017.

Pro Tip: If you have a simple, straightforward tax return, you can save several hundred dollars if you file it yourself (as long as you feel comfortable doing so). On the other hand, if you want advice on how to maximize your retirement savings contributions or to discuss other tax savings strategies, connecting with a Certified Public Accountant (CPA) is a great idea. If you have a complicated tax return, hiring a CPA can also give you peace of mind that your deductions or business income will be handled correctly. And if you do choose to work with a CPA, they’ll appreciate receiving your tax return early!

Get Proactive Tax Planning Guidance

At Bay Point Wealth, we take an integrated approach to tax savings and wealth savings. This means we don’t look at taxes in a vacuum. Instead, we carefully consider how your whole financial picture fits together, so we can identify opportunities to minimize your tax bill and maximize your wealth.

Our team of Certified Financial Planners and CPAs stays up to date on changing tax laws to help you pay less tax today and in the future. We’ll work with you to figure out which retirement accounts and tax-advantaged investments are the best fit for you, as well as when you should recognize investment gains or losses for tax purposes.

If you’re a business owner, we’ll help you manage your company in a way that keeps your taxes low, or come up with a plan to reduce taxes when you sell the business. And if you’re at a later stage in your life, we’ll guide you through the process of passing down wealth to future generations in a tax-efficient way.

Looking for tax advice you can trust? Schedule a call with us today.

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Topics: Tax News, Wealth Management