What to Know For Tax Season

Get Ready, Get Set … Get Helpful Information for Filing Taxes

The signs are everywhere – in stuffed mailboxes, on TV commercials, even on the streets with people dressed in Statue of Liberty costumes holding signs.

Tax season is here!

For some, it can be an opportunity to collect some extra cash with a refund; for others, a dreaded time to pay Uncle Sam what he’s due. Whatever is in store for you this tax season, Kevin Johnson, CPA of O’Connor Maloney Certified Public Accountants in Worcester, wants to help you get prepared with a few updates for filing your taxes for Tax Year 2022.  Let’s take a look:

Where to begin

By now, you’ve probably received tax forms and documents in your mailbox or inbox. Kevin advises you to gather up and take an inventory of all the documents you have, which can include:

• Income-related documents, such as W-2s and 1099s
• Forms and information supporting deductions like mortgage interest, charitable contributions, and real estate taxes
• Health insurance forms
• Documentation about business income and expenses, as well as K-1 forms (for pass through entities)

In addition, depending on the events of 2022, you may have to provide additional documentation, such as closing disclosure forms if you bought or sold a house. Talk to a tax professional about your circumstances to learn more about what you may need to provide.

With many tax documents now sent electronically, it’s important you ensure you have everything you need. Kevin cautions you that just because you may not have received a tax form for income doesn’t mean you’re not responsible for it.

What’s changed for filing taxes

For Tax Year 2022, not a lot has changed, though there were some normal inflation adjustments for standard deductions and retirement. Here are some of the key changes:

• The standard deduction was increased to $12,950 for single taxpayers, and $19,400 for heads of household. For married couples filing jointly, the standard deduction was increased to $25,900.
• The limit for 401(k) plan contributions in 2022 is $20,500 per individual and has increased to $22,500 in 2023. Those 50 or older qualify to make an additional $6,500 catch-up contribution for 2022 and $7,500 for 2023.
• For retirement savers, the age for receiving required minimum distributions (RMDs) in 2023 and future years was increased from 72 to 73.
• Closer to home in Massachusetts, you will most likely not be paying taxes on the 14% refund you received as part of Chapter 62F. If you claimed the standard deduction or itemize, but did not receive a tax benefit, the payment is not included in income.

Other things to know

Kevin shared some additional suggestions to make tax season a little easier:

• If you think you’re missing a tax document, you can usually obtain them online.
• Don’t wait until the last minute to file.
• If you have dependent children who have started working, make sure when they file a tax return they do not claim themselves, as that could prevent you from claiming them as dependents.
• If you’ve made a major financial transaction, such as buying a home selling a home or securities, talk to your tax advisor. In fact, Kevin advises that you should talk to your tax advisor even before you make a major financial decision to help you understand the impact it will have on your taxes. Planning ahead is key to saving money.

Expert helpful is available

Kevin encourages you to talk to a tax advisor about your unique situation. You can call him at O’Connor Maloney, CPAs, at 508-757-6391 or learn more at oconnormaloney.com.