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End-of-the-year taxpayer to-do list

Posted on December 6, 2021

The CPA team at Teipen CPA Group reminds taxpayers there are several key things they should check off their to-do list before the 2021 tax year ends this month.

  • New bank account? Be sure to set up direct deposit

Direct deposit gives taxpayers access to their refund faster than a paper check. You can also open an account at an FDIC-Insured bank,  through most national credit unions (Credit Union Locator Tool) or the Veterans Benefits Banking Program.

  • Begin assembling receipts and files

Our CPAs strongly recommend pulling together your 2021 tax records, including receipts, donations, state taxes paid, bank statements, interest payments, mileage, and other records as the year ends. Give yourself time to determine what records may be missing for which you’ll need to request copies.

  • Check on joint custody arrangements

It’s more common than you might think that divorced or separated parents both claim the same child on their tax returns. Verify children’s social security numbers and make sure each parent is clear on which dependents they claim this year.

  • Donate to charity

Be sure your donations are with IRS-accredited tax-exempt organizations before you list them on your tax return. The IRS has an easy-to-use tool that can help: Tax Exempt Organization Search available on IRS.gov. Search for charities and get helpful information about organizations’ federal tax status and filings. Most cash donations made to charity qualify for the deduction. However, there are some exceptions.

  • How much can you donate?

Even if you do not itemize, taxpayers, including married individuals filing separate returns, can claim a deduction of up to $300 for cash contributions to qualifying charities during 2021. The maximum deduction is $600 for married individuals filing joint returns.

  • Get updated end-of-year information about your retirement plan(s)

A lot has changed in the past year. Check to make sure you are up-to-date on any changes to your retirement plan including contributions and withdrawal limits. Taxpayers should make sure their total salary deferral contributions do not exceed the
$19,500 limit for 2021. If you are 50 or over, you can defer an additional $6,500 for a total of $26,000.

Visit IRS.gov for end-of-year tax guidance about your retirement plans including tax credit available for eligible contributions.

  • Check Individual Taxpayer Identification Number

An ITIN only needs to be renewed if it has expired and is needed on a U.S. federal tax return. If an Individual Taxpayer Identification Number was not included on a U.S. federal tax return at least once for tax years 2018, 2019 and 2020, the ITIN will expire on Dec. 31, 2021.

  • Plan appropriately around expected tax refunds

Taxpayers should be careful not to expect getting a refund by a certain date — especially if you plan to use a refund to make major purchases or pay bills. There are no “2 week turn-arounds.” Just as each tax return is unique to the individual, so is each taxpayer’s refund.

Got a question about your tax preparations for 2021? We want to help – whether or not you are a client. The sooner you connect with a CPA with your concern, the easier your tax prep and sooner your potential tax refund will hit your bank account.