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February 7, 2022  //  FOUND IN: Updates & Resources

With the release of Form W-2 Wage and Tax Statements in recent weeks, tax season has officially begun. Have you kept current with conditions that could affect this year’s return?

What’s changed for 2021 returns

Three factors could affect your 2021 tax numbers:

  • If you received federal child tax credit payments in 2021, it will likely affect your taxes. Look for Letter 6419, which must be included in your tax return.
  • You may qualify for a Recovery Rebate Credit. If you didn’t receive the third economic impact payment in 2021, or received only a partial payment, this rebate could apply.
  • You don’t have to itemize or claim charitable deductions. For 2021, you can deduct up to $300 for cash donations to charities that qualify (up to $600 combined for married filers), whether you itemize or take the standard deduction.

Another change: The official due date for you to file your return or request an extension is Monday, April 18.

Download your W-2

First step: Download your W-2. As an employee or retiree of U-M, you can download your W-2 as long as you previously consented for online delivery. Go to Wolverine Access > Employee Self Service > click on Announcements pop-up link > Self Service > Payroll and Compensation > View W-2/W-2c Forms.

If you didn’t consent to electronic delivery, your W-2 has been mailed to the current address U-M has on file. For this reason and others, it’s a good idea to keep your address current. Update this information and more in Wolverine Access > Employee Self Service > Campus Personal Information.

DIY taxes or hire a pro?

Once you have your W-2 in-hand, should your taxes be a DIY project or should you hire a pro?

DIY advantages…

It’s a money-saver. According to the U.S. Internal Revenue Service, the average cost to have a certified professional prepare a simple tax return is about $270. Add itemized deductions, a personal business or other factors, and the cost increases.

Once you start adding variables, however — you own your home, are married, have multiple investment accounts, inherited Uncle Fred’s estate or have children — your financial web gets more intricate.

Remember, also, that DIY prep means you’re on your own if the IRS has questions or audits your return.

Or go for a pro

Why invest in a certified tax preparer? It’s their job to know the ins and outs of tax law, which is complex and changes frequently. Certified professionals also are experienced in dealing with complicated returns and audits.

Who’s a good candidate for hiring a professional? If you’re married with two incomes, own more than one home/property, operate one or more businesses, have multiple investments or have children, the adage “better to be safe than sorry” generally applies.

A big advantage you’ll get from a certified pro is security. Once your return has been filed by a certified preparer, most will assist you at no charge if your return is audited.

Help from the IRS

If your adjusted gross income is $73,000 or less, prepare your taxes through IRS Free File. The program is offered in partnership with tax prep and filing industry leaders, and works much like for-profit software programs. Certain conditions apply.

More IRS programs for qualified individuals include:

Through its partnerships, United Way helps families connect with VITA programs. And, individuals of any income have access to MyFreeTaxes, a service that uses the same tax filing software that professionals use.

Find a pro

Go to the IRS site for tips about selecting certified tax preparers and avoiding scammers.

Please note: Tax information is provided for general informational purposes only. U-M does not provide tax advice or endorse tax preparation software or services. Questions or concerns should be addressed to a qualified tax adviser.

This story first appeared in UHR News. Click here to subscribe!

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