By Stephanie Harper,
Special at AFRO
With tax season still looming on the horizon, taxpayers are feeling the pressure to navigate the ins and outs of new updates and regulations that have been passed.
While some of the tax breaks like the ACTC (Advanced Child Tax Credit) and EIP (Economic Impact Payment) have benefited taxpayers this season, it takes skillful preparation to get the maximum refund.
Making Change strives to “provide pathways to improve lives through financial education and services,” with the goal of “empowering clients and teaching them the tools they need to be successful in achieving their financial goals. “.
In honor of the last Financial Literacy Month, AFRO discussed top tax reporting mistakes with Jasmine Brewer, Executive Director of Making Change. The non-profit financial services center helps low-income clients prepare their taxes and avoid the pitfalls listed below.
Provide incomplete tax documents to your preparer
This is one of the major delays and frustrations experienced by taxpayers and preparers during the process. Having accurate documents and proper identification can be a treasure hunt for those unprepared.
According to information listed on the IRS website, some of the most common documents needed to file tax returns include:
- Social security numbers of all parties listed on the tax return
- Bank account and routing numbers if you choose the fastest and most secure way to receive your return by direct deposit, instead of a check in the mail
- A W-2 form from all employers
- A 1099 of “banks, issuing agencies and other payers, including unemployment benefits, dividends, distributions from a pension, annuity or retirement plan”
- A Form 1099-K, 1099-MISC, W-2, or other income statement for “gig economy workers”
- All documents related to “other income” and “virtual currency transaction records”
- Form 1095-A, Health Insurance Market Statementif you need to reconcile “prepayments or claim premium tax credit”
- A letter 6419 to reconcile everything prepayment of child tax credit made
Neglecting tax deductions
With all of the new credits and discounts, it’s easy to review credits and deductions that might result in a higher refund or lower payments.
The IRS lists a multitude of deductions for families and individuals. “professional expenses, professional car use and professional home use » all are considered allowable deductions for individuals. Itemized deductions include “property tax“, ” VScharitable contributions,” “hmortgage interest” and Mcurrent expenses.”
Not declaring your taxes
Some taxpayers are afraid to file after failing to file for one or more tax years. Don’t get me wrong, letting the years pile up only complicates things further when you’re ready to file or legally and financially can’t afford to put it off any longer. Residents can face penalties if they don’t file their taxes by the deadline. In 2022, the deadline for filing is April 18.
If you haven’t filed for several years, be sure to find a tax preparer who can handle the task of submitting documents for multiple tax seasons.
Making Change is a 30-year-old non-profit organization that provides free, personalized financial counseling services to individuals and families. Clients benefit significantly from the one-on-one, unbiased advice provided by advisors on all aspects of their financial lives, including budgeting, housing, credit and debt management, and tax preparation.
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