Stash’s Tax Checklist: Things You Need to Know Before You File

It might seem like you just filed last year’s taxes, but it’s time to start thinking about filing your 2021 tax return. 

The Internal Revenue Service (IRS) typically begins accepting tax returns for income earned in 2021 by the end of January 2022. The IRS pushed the start date for tax season to test updates to its filing system that account for pandemic-related changes to people’s incomes, including the second round of stimulus checks approved at the end of 2021. The deadline to submit your tax return or apply for an extension is Monday, April 18, 2022, instead of the usual April 15 deadline, because of a federal holiday

To help you prepare to file, Stash has created the following checklist to help make sure you’re informed for the upcoming filing season and that you have everything you need: 

#1 Know how Covid-19 might affect your filing

You might have paused your student loan payments in 2021 in response to the forbearance period, during which federal student loans haven’t accrued interest. For those who have federal student loans, you may be eligible to deduct part of the interest you paid on those loans in 2022, if you paid $600 or more in interest. 

Another thing to take into consideration is the increased Child Tax Credit, which began in July 2021. As part of the $1.9 trillion stimulus package known as the American Rescue Plan, the IRS increased the child tax credit for children under the age of six to $3,600, and for children between six and 17 to $3,000 from its current $2,000 per child. The revamped tax credit, which is dependent on income, reportedly benefits 88% of American families with children. Those who qualify are able to receive half of the benefits as monthly payments, and the other half after filing their 2021 tax returns. To receive the remainder of your credit, you’ll need to fill out Schedule 8812 (Form 1040).

#2 Find out which forms you need and when to expect them

Before you start to file, know which forms you’ll need and make sure you have them. If you are, or were, fully employed by a company that withheld taxes from your paycheck in 2021, you should receive a W-2 based on the W-4 withholding information you filled out when you started. If you’re a freelancer or a contractor, you should receive a 1099 form. Companies are required to send out W-2s and 1099s to employees by January 31, 2022.

Keep in mind that you might have additional forms based on your situation. For example, if you withdrew from your retirement accounts, you might receive 1099-R. Or if you received dividends from investments or you have realized capital gains or losses from investments, you might get a 1099-DIV or a 1099-B. For more information on which forms you might receive if you invest with Stash and when go here. 

#3 Figure out your tax bracket

Another important thing to know when you start assembling your paperwork is what tax bracket you’re in. Here are the tax brackets for individuals and married couples in 2021, adjusted for inflation: 

2021 Federal Tax Rates, Unmarried Individuals:

Source: IRS

2021 Federal Income Tax Rates, Married Filing Jointly:

Source: IRS

#4 Gather any receipts you’ll need if you decided to itemize

For the 2021 tax year, the standard deduction for individuals is $12,550 and $25,100 for married couples. By taking the standard deduction, you can reduce your taxable income by that amount. But you might instead decide to itemize your deductions if you’re not permitted to take the standard deduction for some reason, or if your itemized deductions are likely to be worth more than the standard deduction. 

You might itemize expenses such as property taxes, interest accrued on your mortgage, charitable contributions, work-related expenses, and more. If you decide to itemize your deductions, you’ll need to collect all of the receipts and documents to substantiate your expenses.

#5 Determine whether you’ll need to work with a tax professional

You’ll also need to decide how you’re going to file your taxes. You might want to use an online service. Or if your taxes are more complicated this year because, for example, you lived in multiple states or worked a few different jobs, you might want to work with a tax professional. 

Taxpayers who earned $73,000 or less in 2021 might qualify for the Free File Program from the IRS. Some tax preparation companies allow those taxpayers to file their federal, and in some cases state, taxes free of charge.

#6 Consider filing online, or apply for an extension 

The IRS recommends filing your tax return online in order to expedite the process of receiving a refund if you do receive one. You might also consider setting up direct deposit with your return so your refund can be deposited into your account without you needing to wait for it to arrive by mail. You can set up Direct Deposit with Stash to get your refund routed to your Stash account. 

And remember that if you need more time to file your return, you need to apply for an extension by April 18. For more information, visit Stash’s tax center.