Avoid the last-minute rush to file your taxes on time with the right preparation and information this year.  Several tax changes which could affect you in this tax season took place last year. Examples include the increase in charitable giving deductions and the expanded Child Tax Credit. To reconcile these taxes changes on time, you’ll need to organize your finances and plan your taxes. Here are steps you can take to get your tax filing ready before April.

#1. Know Your Tax Income Brackets and Rates

The IRS has revealed that the federal tax returns and payments deadline will be on the 18th of April 2022. Last year, the standard deduction was accelerated because of inflation to $12,550 for one filer and $25,100 for married couples filing together. Seeing that your tax rate is dependent on your tax bracket (income range), it will be good to know that the tax bracket for the year 2022 will also increase. This is as a result of the after-effects of the coronavirus pandemic on the economy. Hence, the standard deduction for this year will increase to $12,950 and $25,900 for both single and married couple filers, respectively. Here is a detailed breakdown of how you can confidently file your taxes this year. For instance, if your income is $50,000, you automatically fall under the tax bracket of 22%. However, this does not mean you’ll get to pay a flat rate of 22%. Instead, a fraction of your income will be taxed at 10% and the other fraction 12%. 

The table below is a representation of the breakdown of the tax rate income of 2022 with a slight difference from 2021.

2022 Income Tax Rates And Brackets

#2. Review Your Last Year’s Tax Return

Obviously, you won’t be starting from scratch every tax year so to say, however, it won’t cost you anything to take a look at your last year’s tax return. Doing so will enable you find out what you need to do this year and not miss out on any important details like; 

• Interest and dividends forms: This return will remind you of the tax forms sent to you in the past, such as 1099s.
• Charitable deduction forms: You might not always get a receipt for all the charitable donations you made, last year’s tax return form can, however, help you keep track of those donations.

Below is a table showing last year’s income tax rates and brackets.

2021 Income Tax Rates And Brackets

It is important to note that you can pay your taxes through the standard deductions or compute your deductions one after the other. 

Both methods have their importance, but when your itemized deductions exceed the standard deduction amount, itemizing becomes the best choice. All the same, keep in mind that different situations call for different measures. Below is a table showing the standard deductions for tax years 2020, 2021, and 2022.

Standard Deductions Table

#3. Tax Deductions and Credits to Consider for Tax Season 2022

Every taxpayer wants more deductions and credits so that they can save more of their earnings. Tax deductions make this possible. Tax deductions are more like discounts on your taxes. They are a reduction of dollar amounts from your taxes. They help lower the actual amount of taxes owed. Some are only available when your deductions are itemized (counted one by one), while others are still available even when you go for standard deductions. There are two types of tax deductions; refundable and nonrefundable. For instance, if your credit is bigger than your tax debt, the extra is paid to you as a refund for a nonrefundable credit. If it’s a nonrefundable credit, the tax allocated to you will be automatically reduced to zero.

Deductions and credits you might be able to claim on your 2021 tax return include:

#1. Charitable Deductions

As a taxpayer, you are entitled to a deduction in your tax on the basis of “Taxpayer Certainty” and the Disaster Tax Relief Act of 2020. This Act extended two charitable giving changes allowing you to deduct up to 100% of your adjusted gross income (AGI). However, you can only get access to this reduction if you plan on itemizing your deductions. If you use a standard deduction, you may only claim an above-the-line deduction.

#2. Medical Deductions

Even with huge medical bills, you can find considerable tax relief related to medical bills. You can deduct as much as 7.5% of your AGI using an itemized deduction plan.

#3. Child Tax Deduction

Last July, the IRS gave out a little token to parents. This allowance was paid through advanced monthly payments of $300 and $250 to children under six years and 6-17 years, respectively. You should consider not opting out of the advanced monthly payment to get a child tax deduction if you have children.

#4. Earned Income Tax Credit

This non-refundable tax credit is designed to help low- and middle-income households save money. If you are a single filer with no child, you can pay $21,430, but for married filers with three or more children, it’s $57,414.

#5. Business Deduction

This deduction mainly favors only self-employed business owners. You can claim a tax return on travel expenses and home office deduction when you use a part of your home for business.

To get your taxes done right in 2022, you have to determine how complex your needs are. There are tremendous benefits to having a tax professional file your taxes while you focus on running your business.