Tax Planning

Tips to Make Tax Season Less Taxing

January 25, 2022

According to the IRS, the average taxpayer spends about 13 hours completing his or her annual return.* And even if you hire an accountant to prepare your taxes, it could take hours to gather the paperwork you need to provide.

Since tax season is here, we share tips to make your experience less stressful this year.

Get organized. Set up an electronic folder to store important tax documents on your computer and an old-fashioned file folder for hard copies. Having this information at your fingertips means you won’t have to spend time searching for it when you need it.

Keep a checklist of the information your accountant requires. To complete your tax return, your accountant will need your identification information and tax filing documents. Your accountant is likely to request your:

  • Personal and dependent information, including all social security numbers and/or tax IDs, dates of birth, and bank account information to pay your balance or receive your refund directly.
  • Income documentation, including W-2s from your employer, 1099s from other sources of income, self-employment, business earnings, RMDs (1099-R), pension and/or trust income.
  • Applicable expense and/or deductions, such as allowable business expenses, alimony payments, mortgage interest statements, real estate/property taxes, charitable donations, and retirement/HSA contributions.

Watch your mail. W-2 forms from your employer and 1099s (for non-employee compensation) should be sent out by January 31st. To stay organized, it’s best to put these ‘Important Tax Documents’ directly into your file folders when you receive them. By the middle of February, check to see if you’ve received the forms that you’re expecting. This year, the tax filing deadline is Monday, April 18th.

Contact your Washington Trust Wealth Advisor. Some clients may be able to take advantage of 2021 tax planning options, if they are eligible and act before April 18th, such as making a prior-year contribution or creating/funding a Roth IRA. Even if those options are not available/advisable, your Advisor can work with you and your accountant to incorporate tax planning into your overall wealth plan.

* 1040 (and 1040-SR) Instructions, Tax Year 2021, p. 108, IRS

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