By Stephanie Harper, Special to the AFRO
As tax season still looms ahead, taxpayers are feeling the pressure of navigating the ins and outs of the new updates and regulations that have been passed.
While some of the tax breaks like the ACTC (Advanced Child Tax Credit) and the EIP (Economic Impact Payment) have benefited taxpayers this season, it takes skilled preparation to secure the maximum refund.
Making Change endeavors to “provide pathways to enhance lives through financial education and services,” with a goal to “empower clients and teach them the tools that they need to succeed in reaching their financial goals.”
In honor of final Financial Literacy Month, The AFRO discussed the top tax-filing 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.
Providing incomplete tax documentation to your preparer
This is one of the major delays and frustrations that taxpayers and preparers experience during the process. Having accurate documents and proper identification can be a scavenger hunt for those unprepared.
According to information listed on the IRS website, some of the more 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 faster and more secure way of receiving your return via direct deposit, instead of a check in the mail
- A W-2 form from all employers
- A 1099 from “banks, issuing agencies and other payers including unemployment compensation, dividends, distributions from a pension, annuity or retirement plan”
- A 1099-K, 1099-MISC, W-2 form or other income statement for “workers in the gig economy”
- Any documents related to “other income” and “records of virtual currency transactions”
- Form 1095-A, Health Insurance Marketplace Statement, if you need to reconcile “advance payments or claim the premium tax credit”
- A Letter 6419 to reconcile any advance child tax credit paymentsmade
Overlooking tax deductions
With all of the new credits and rebates, it’s easy to look over credits and deductions that could result in a higher refund or lower payments.
The IRS lists a host of deductions for both families and individuals. “business expenses, business use of car and business use of home” all qualify as eligible deductions for individuals. Itemized deductions include “Property tax,” “charitable contributions,” “home mortgage interest” and “moving expenses.”
Not filing taxes
Some taxpayers are afraid to submit after failing to file for one or more tax years. Make no mistake, letting the years accrue only further complicates matters when you are ready to file or legally and financially can no longer afford to put it off. Residents can face penalties when they do not file their taxes by the deadline. In 2022, the deadline to file is April 18.
If you have not filed for multiple years, make sure you find a tax preparer that is adept at handling the task of submitting paperwork for multiple tax seasons.
Making Change is a 30-year-old nonprofit organization that provides free and personalized financial counseling services to individuals and families. Clients benefit significantly from the one-on-one, unbiased guidance provided by counselors on all aspects of their financial lives including budgeting, housing, credit and debt management and tax preparation.
The post Financial literacy expert, Jasmine Brewer, explains the top three tax-filing pitfalls appeared first on AFRO American Newspapers .