Preparing your own income tax return can be a challenging task that can leave you with more questions than answers.

Unless you are very well versed on IRS tax law, you can prepare your own taxes, but most people are not very familiar with all the current changes in tax law.

Even if you use a tax software, there is no substitute for the assistance of an experienced tax professional.

There is too much at stake when preparing your individual tax return. It could mean several thousands of dollars in savings!

It could mean you having to pay to the IRS a huge tax bill or not being able to maximize your income tax refund for not using all the available credits and deductions.

Another risk is being audited by the IRS for not using the correct form, claiming the wrong credits and deductions, or not providing enough evidence to substantiate income and expenses.

According to a study released by the US Government’s General Accounting Office last year, most taxpayers believe they benefited from using a professional tax preparer.

When we prepare your personal income tax, we make sure that you do not leave credits and deductions unclaimed, that we cover all of your personal situations, such as dependents, investments, retirement, education credits, etcetera, and all your itemized deductions.

When you choose our services:
– You will get an experienced tax preparer that has passed the Annual Season Filing Program with the IRS, which gives our firm the IRS approval to prepare taxes.
– Your tax return will be checked and rechecked by our computer software identifying potential problems the IRS may look at more closely.
– Your tax return will be filed electronically so you will get a refund back quicker.
– We will show you how to adjust your payroll federal tax withholding so you can get a bigger refund.
– Our firm will guide you through potential deductions to limit your tax liability or to maximize your refund.

Our firm can assist you whether you need to file a current year tax return or prior year return.

When it’s tax season, it can be extremely beneficial to have a professional tax preparer on your side.

Accountegrity Tax can help you with deductions and credits to ensure you receive the largest refund. ​We have vast knowledge of the forms, schedules, and rules to maximize your potential tax savings.

The United States has a progressive tax system. That means people with higher taxable incomes are subject to higher tax rates, while people with lower taxable incomes are subject to lower tax rates.

There are seven federal income tax
brackets: 10%, 12%, 22%, 24%, 32%, 35% and 37%.

For tax year 2021, these are the tax rates single taxpayers and married couples filing jointly:

• 37% for incomes over $523,600 ($628,300 for married couples filing jointly).
• 35%, for incomes over $209,425 ($418,850 for married couples filing jointly);
• 32% for incomes over $164,925 ($329,850 for married couples filing jointly);
• 24% for incomes over $86,375 ($172,750 for married couples filing jointly);
• 22% for incomes over $40,525 ($81,050 for married couples filing jointly);
• 12% for incomes over $9,950 ($19,900 for married couples filing jointly).
• The lowest rate is 10% for incomes of single individuals with incomes of $9,950 or less ($19,900 for married
  couples filing jointly).

No matter which bracket you’re in, you probably won’t pay that rate on your entire income. There are two reasons:
1. You get to subtract tax deductions to determine your taxable income (that’s why your taxable income usually isn’t the same as your salary or total income).
2. You don’t just multiply your tax bracket by your taxable income. Instead, the government divides your taxable income into chunks and then taxes each chunk at the corresponding rate.

For example, let’s say that for year 2020 you’re a single filer with $32,000 in taxable income. That puts you in the 12% tax bracket in 2020.

But do you pay 12% on all $32,000? No. Actually, you pay only 10% on the first $9,875; you pay 12% on the rest.

If you had $50,000 of taxable income, you’d pay 10% on that first $9,875 and 12% on the chunk of income between $9,876 and $40,125.

And then you’d pay 22% on the rest, because some of your $50,000 of taxable income falls into the 22% tax bracket.

Example for Single Filer in the year 2020

The IRS recommends that you keep all tax-related records for 3 years in case of an audit.

However, old tax documents (such as last year’s W-2’s) can come in handy when you are filling out your current year’s tax return.

An example of some of the tax records you should store from previous years (and reference for next year’s income tax return) is listed below.

This is not an exhaustive list, and you may have additional forms or receipts that are not listed below. 

TIP: To make your mountain of documents easier to store, try scanning them and keeping them as PDF files.

o W-2 forms
o Pay stubs for the year
o Home mortgage payment stubs and/or home purchase closing statement
o Last year’s tax return (for quick reference and comparison)
o Receipts from anything you might claim as an itemized deduction
o Receipts from any charity (e.g. for clothing donations, church tithes, disaster relief donations, etc.)
o Car mileage log (in case you intend to claim it as a business expense)
o Any receipts for business travel expenses
o Canceled checks (especially for IRA contributions and other deductions)
o Credit card statements and bank statements (these can be used to verify any deductions)
o Medical bills (especially if they exceed 7.5% of your income)
o 1099-G form (for deducting state or local income taxes)
o 1099 forms (from any dividends or other income paid to you)
o Mobile phone bills (especially if you made charitable donations by text message)

You should also keep records if any of the following apply:

• Six years: If you under-reported your income by more than 25%.
• Seven years: If you wrote off the loss from a “worthless security.”
• Indefinitely: If you committed tax fraud or you didn’t file a tax return.

Tax planning is the process of acquiring the latest tax knowledge and taking the necessary steps to
reduce your income tax burden.

If you want to either reduce your taxes or increase your refund for your next return, then tax planning throughout the year is critical.

In addition, when planning for life changing events (marriage, home purchase, career change, etc.) you should also consider the possible tax implications.

The same is true for unplanned life changing events, they might have unplanned tax consequences.

Most people only think about taxes when is tax season, but the smart person takes action and makes adjustments during the year so when time season comes, he/she is not surprised with a tax bill, but rather has an idea of how much the tax liability or tax refund amount will be.

One way to start preparing for your taxes is to start adjusting your Federal Tax Withholding.

If you are the person who doesn’t like to pay the IRS when filing your taxes, then you should check your dependents in your W-4 with your employer.

Also, if you are a small business owner, sending quarterly estimated payments using the Form 1040-ES can help you mitigate your tax liability. 

Tax planning also starts with understanding your tax bracket. You can’t really plan for the future if you don’t know where you are today.

So, the first tax planning tip is get a grip on what federal tax bracket you’re in.

Please take a look at our section about the Federal Tax Brackets and Tax Rates so you can understand how the progressive tax system works.

Standard vs. Itemized Deductions:

Prior to the passage of TCJA, millions of taxpayers were able to claim a larger deduction on their tax returns by itemizing their deductions. Thanks to the higher standard deductions, this may no longer be necessary.

Between the 2018 and 2025 tax years, when the TCJA will be in effect, the number of taxpayers for whom itemizing will pay off is likely to drop significantly due to the much bigger standard deduction.

What does ‘itemize’ mean?
Instead of taking the standard deduction, you can itemize your tax return, which means taking all the individual tax deductions that you qualify for, one by one.

• Generally, people itemize if their itemized deductions add up to more than the standard deduction. A key part of their tax planning is to track their deductions through the year.
• The drawback to itemizing is that it takes longer to do your taxes, and you have to be able to prove you qualified for your deductions.
• You use IRS Schedule A to claim your itemized deductions.
• Some tax strategies may make itemizing especially attractive. If you own a home, for example, your itemized deductions for mortgage interest and property taxes may easily add up to more than the standard deduction. That could save you money.
• You might be able to itemize on your state tax return even if you take the standard deduction on your federal return.

Deciding whether to itemize or take the standard deduction is a big part of tax planning, because the choice can make a huge difference in your tax bill.

What is the standard deduction?
Basically, it’s a flat-dollar, no-questions-asked tax deduction. Taking the standard deduction makes tax prep go a lot faster, which is probably a big reason why many taxpayers do it instead of itemizing.
Congress sets the amount of the standard deduction, and it’s typically adjusted every year for inflation.

The standard deduction that you qualify for depends on your filing status, as the table below shows.
For tax year 2021.

The Standard Deductions are:

• Single: $12,550
• Married Filing Jointly $25,100
• Married Filing Separately $12,550
• Head of Household $18,800

The standard deductions were nearly doubled with changes brought by the Tax Cuts and Jobs Act for 2018 Key Takeaways.

• Itemized deductions help some taxpayers lower their annual income tax bill more than the standard deduction would provide.
• The surviving itemized deductions include several categories like medical expenses, mortgage interest, and charitable donations.
• Itemizing most often makes sense for higher-income earners who also have a number of large expenses to deduct.

How to report the Advanced Child Tax Credit when filing 2021 Tax Return?

Advance Child Tax Credit payments are early payments from the IRS of 50 percent of the estimated amount of the Child Tax Credit that you may properly claim on your 2021 tax return during the 2022 tax filing season.

If the IRS processed your 2020 tax return or 2019 tax return before the end of June,
these monthly payments began in July and continued through December 2021, based on the information contained in that return.

Collect all documents before preparing a tax return. Collect W-2s, Form 1099s and other income-related statements.

People who need to reconcile advance child tax credit payments or claim the recovery rebate credit will need additional information when they file.

Individuals must have the total amounts of advance child tax credit payments to receive the remainder of their child tax credit and the amounts of their third Economic Impact Payment to claim a Recovery Rebate Credit.

Taxpayers should check their online account or review Letter 6419, 2021 Total Advance Child Tax Credit Payments, and Letter 6475, Your 2021 Economic Impact Payment, for their total payment amounts
to help them file an accurate return.

If married taxpayers received payments based on a joint return, each spouse received half of the payments. Each spouse can find their payment total in their own online account or letter. They should add the payments together to provide the total amount.