Tax Tip of the Month – December 2021

Gather and organize tax records

Organized tax records make preparing a complete and accurate tax return easier. It helps avoid errors that lead to processing and refund delays. Individuals should have all their tax information available before filing to ensure the return is complete and accurate. They should notify the IRS if their address changes and notify the Social Security Administration of a legal name change.

Remember, most income is taxable. Recordkeeping for individuals includes:

  • Forms W-2 from employer(s)
  • Forms 1099 from banks, issuing agencies and other payers including unemployment compensation, dividends, distributions from a pension, annuity or retirement plan
  • Form 1099-K, 1099-MISC, W-2 or other income statement for workers in the gig economy
  • Form 1099-INT for interest received
  • Other income documents and records of virtual currency transactions Income documents can help individuals determine if they’re eligible for deductions or credits. Additionally, people who need to reconcile their advance payments of the Child Tax Credit and Premium Tax Credit will need their related 2021 information. Those who received third Economic Impact Payments and think they qualify for an additional amount will need their stimulus payment and plus-up amounts to figure and claim the 2021 Recovery Rebate Credit. Taxpayers should also keep end of year documents including:  
  • Letter 6419, 2021 Total Advance Child Tax Credit Payments, to reconcile advance Child Tax Credit payments
  • Letter 6475, Your 2021 Economic Impact Payment, to determine eligibility to claim the Recovery Rebate Credit
  • Form 1095-A, Health Insurance Marketplace Statement, to reconcile advance Premium Tax Credits for Marketplace coverage Online Account securely provides tax account information on; helps provide important filing information    
  • Taxpayers who have an Online Account may:
  • Taxpayers with questions about how to create an account or how to reset their username or password can find help at How to Register for Certain Online Self-Help Tools. Individuals should act now if they need to create an account. If they’re unable to verify their identity online, there’s a mail option they can use, but that takes longer.
  • Individuals who have not set up an Online Account yet should act soon to create an account. People who have already set up an Online Account should make sure they can still log in successfully.
  • Eligible individuals claiming a 2021 Recovery Rebate Credit can log in to their online account to see their Economic Impact Payment amounts so they can accurately claim the credit when they file.
  • Taxpayers who access Online Account can securely gain entry to the Child Tax Credit Update Portal to see their payment dates and amounts. Taxpayers will need this information to reconcile their advance Child Tax Credit payments with the Child Tax Credit they can claim when they file their 2021 tax returns. 
  • View the amounts of their Economic Impact Payments
  • Access Child Tax Credit Update Portal for information about their advance Child Tax Credit payments
  • Approve or reject authorization requests from their tax professional
  • Update their email address and opt-out/in for selected paper notice preferences