How to Prepare for Tax Season with the Best Bank Near You
Now that we’re officially in a new year, it means the holiday season is behind us, and tax season is on the horizon. In fact, for many folks, tax season has already begun. A couple key dates have already come and gone that may be of interest to filers.
January 13th marked the first day that IRS Free File opened online. For those who made $73,000 or less in 2022, the IRS is now allowing that demographic to file for free using a secure tax filing software that is provided for use at no cost.
January 23rd marked the date that the IRS officially began accepting and processing tax returns for 2022.
As one of the best banks near you in the Midwest, we strongly advise filers to take advantage of the IRS Free File if they qualify for it. The software is easy to use and can potentially save you money if you’ve been paying a CPA or other professional tax preparation service to do your taxes for you.
Regardless of which method of tax filing you use, there are a few items and documents filers need to collect to ensure they have all their proverbial ducks in a row. Refer to the following steps when getting ready for tax season.
Step #1 – Get All Your Documentation in Order
Seasoned filers should know the drill by now when it comes to gathering documentation. As a refresher, filers need to collect the following:
- W-2 from your place of employment
- 1099 form (if applicable); this form is provided by your local bank or other issuing agency that details retirement plan distributions, pension, dividends, and unemployment compensation
- 1099-MISC or 1099-K form (if applicable) for freelance, contract work, or gig economy employment
- 1099-INT form (if applicable) for paid interest on savings bonds, CDs, and money market accounts
- 1095-A form (if applicable) that pertains to your health insurance marketplace
- Any relevant documentation relating to income from digital assets such as NFTs or cryptocurrency
- Any relevant letters from the IRS that pertain to your 2022 tax filing
Step #2 – Standard vs. Itemized Deductions
The Tax Cuts and Jobs Act made some significant changes to tax law. Specifically, in the area deductions. Filers can choose between getting a standard deduction amount that is determined by their filing status or they can choose to itemize their deductions. Obviously, filers need to figure out if itemizing yields a higher dollar amount than the standard deduction.
However, it’s worth noting that itemizing deductions is more labor intensive. It requires those filing to fill out more forms and collect a year’s worth of receipts and invoices to prove their deductions.
For reference, the standard deduction amounts for the 2022 tax year are as follows:
- Filing status of single: $12,950
- Filing status of married, filing jointly: $25,900
- Filing status of married, filing separately: $12,950
- Filing status of head of household - $19,400
As tax professionals will tell you – more often than not – taking the standard deduction is probably the best option for those that don’t have many work-related expenses. According to recent data from Ramsey Solutions, approximately 87 percent of filers take the standard deduction.
Step #3 – Decide How You’d Like to File
If you have a simple tax filing – “simple,” meaning limited documentation is required – then we encourage you to look into filing using the IRS Free File or a reputable tax filing software.
Those who have complex filing ahead of them are encouraged to reach out to a CPA or professional tax preparation agency. Any of the following scenarios may warrant the help of a tax professional:
- You actively traded stocks
- You actively bought, sold, and/or traded NFTs or cryptocurrency
- Your marital status changed
- You sold your home
- You worked in multiple states
- You moved to another state
- You own rental properties
- You own a small business, self-employed, or do contract/gig economy work
- You have several itemized deductions that you need assistance with
Looking for the Best Bank Near You in the Midwest? Contact Verimore Bank!
Although we don’t specialize in tax preparation, Verimore Bank provides our customers with 24/7 access to their accounts and financial statements, which tends to come in handy during tax season. Not only are we one of the most reliable banks for individuals, but we also happen to be one of the best banks for small business owners.
Verimore Bank offers the following products and financial services:
When you’re ready to get started with an account - or have questions - we’re here for you.
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Disclosure: Verimore Bank is not your tax advisor. Please consult with one before filing your taxes.
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