With this tax season behind us, it’s time to start thinking about next year. We know you have a lot going on and taxes are probably the last thing on your mind as a small business owner. But the truth of the matter is, getting organized and staying up-to-date on IRS requirements now and throughout the year will make your life a whole lot easier come 2022.
Here’s how to prepare for tax season with these simple tax tips:
View your account information
The IRS provides a secure and convenient tool where you can view all your federal tax information. When you visit your online account, you’ll be able to see all the details on your most recent return.
Small business owners will be able to see all Economic Impact Payments they’ve received. Individuals may need their adjusted gross income from the previous year if they’re using different software to file their returns this year.
Gather your tax records
Get your tax records together to make preparing your return easier. It will also help you discover any overlooked deductions or credits. Keep the following forms organized:
- Forms W-2 from employers
- Forms 1099 from banks and other payers
- Other income documents and records of virtual currency transactions.
- Form 1095-A, Health Insurance Marketplace Statement, if you purchased Marketplace coverage
- Notice 1444, Your Economic Tax Payment, if you received an Economic Impact Payment and think you qualify for the Recovery Rebate Credit
Just a reminder, most types of income are taxable. This includes the following:
- Unemployment income
- Refund interest
- Income from the gig economy
- Virtual currencies.
Check your Individual Tax Identification Number (ITIN)
An ITIN is a tax processing number issued by the Internal Revenue Service.The IRS uses this number to help individuals remain compliant under U.S. tax law and to offer a way to process tax returns and payments for those not eligible for Social Security numbers.
It’s possible that your ITIN has expired. If so, you’ll need to request a new one from the IRS prior to filing your next return. Submit a form Form W-7, Application for IRS Individual Taxpayer Identification Number to renew your number.
Ensure you’ve withheld enough tax
The IRS offers a tool called the Tax Withholding Estimator to determine the correct tax amount to have taken out of your paycheck. This will help you determine if you need to submit another W-4 form to your employer.
You should also try to make quarterly tax payments on your returns, especially if you have several kinds of income such as self-employment income, investment income, and taxable Social Security benefits.
Hire an accounting firm who can keep you organized
At Elevated CPA, we know what it’s like to be overwhelmed as a small business owner. You can trust us to put you and your business first. Our software allows us to monitor your account 24/7 so any changes, notices, or new filings won’t go unnoticed. Schedule a 15-minute introductory call with us so we can help you prepare for the next tax season.