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Financial Planning Tip February

February 2022

It’s February and time to start prepping for tax season. You've probably heard that the IRS is so backed up that it hasn't finished processing 2020 returns. If you need to file an amendment, you'll get in line at the back of this queue. That's why it's especially important this year to double-check your documents and get things right the first time.

It's likely you already received tax documents from your employer and your bank. In the next few days we will be sending out tax reference reports for clients with taxable accounts. Here are four things to do now that will help tax season go smoothly for you and your tax preparer 1. Start collecting tax documents. Make a folder and put everything in one place.

  • W-2s from employment (deadline for sending these is January 31)

  • Most 1099s will be mailed January 31. This includes those from banks, contract employers, social security, etc.

  • 1099s from SSG will be available starting January 31 with revisions through March 15.

  • Tax reference report from Midway (February 4)

  • If you made a QCD from your IRA this year, inform your tax preparer that some (or all) of the distribution reported on your 1099-R was part of a qualified charitable distribution. QCDs are reported the same as taxable distributions even though they aren't taxable.

  • Form 1095, which reports your health insurance coverage for the year, may not be mailed until early March. This is a moot point for your taxes, as there is no longer a penalty for failing to maintain health insurance

2. Make a checklist of things you expect to receive. Your tax preparer will not know what’s missing but you will. 3. Be aware that you may receive documents that are online only. Check up on accounts that haven't sent you a paper document to confirm nothing has been posted online. 4. Check the account title on your documents. You will sometimes receive retirement account tax statements that are informational only. File these separately.

It bears worth repeating that amending this year's return will be especially painful. An extra hour now to ensure everything is in order could save you months of delays down the road.


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