Make tax season less taxing
With the release of Form W-2 wage and tax statements this month, tax season has officially begun. Have you kept current with conditions that could affect this year’s return?
What’s changed for 2022
Per the U.S. Internal Revenue Service (IRS), three tax credits have changed for 2022 returns:
- Those who received $3,600 per dependent in 2021 for the Child Tax Credit will, if eligible, receive $2,000 per dependent for the 2022 tax year.
- For the Earned Income Tax Credit, eligible taxpayers with no children who received approximately $1,500 in 2021 will get $500 in 2022.
- The Child and Dependent Care Credit returns to a maximum of $2,100 in 2022, instead of $8,000 in 2021.
- Another change: The official due date for you to file your return or request an extension is Tuesday, 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 > Payroll Tax Forms (W-2, W-4) > View W-2/W-2c Forms.
If you didn’t consent to electronic delivery, your W-2 will be 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?
- It’s a money-saver. According to the IRS, 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 with 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.
The IRS offers tips about selecting certified tax preparers and avoiding scammers.
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:
- The Volunteer Income Tax Assistance (VITA) program, available to those who make $57,000 or less, who have disabilities, or who speak limited English
- The Tax Counseling for the Elderly program, available to those age 60 and older, and specializing in questions about pensions and retirement-related issues unique to seniors
- 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.
Please note: Tax information is provided for general informational purposes only. The University of Michigan 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!