Income Tax Issues And How To Solve Them

Filing income tax returns has become relatively easier now, however, people often have problems during the process. If not dealt with, they could lead to defective returns or more problems later at the time of claiming a tax refund, or worse, invite an Internal Revenue Service (IRS) audit. To help you with these problems, Michael J. Berger and Co., CPA’s LLP, has noted down some common income tax issues faced by individual taxpayers and ways to solve or deal with them efficiently. 

1. Gathering all needed tax information to properly prepare income tax returns
Many times people are unaware of how they should file their taxes as there are many different forms you can use. It’s important that you use the correct form while filing your tax returns. There are different forms for different combinations or sources of income. From January 1st to February 28th, most taxpayers receive the necessary tax forms to complete an accurate tax return. Ensure you receive all these forms and double-check online to confirm if you have them all. 

2. This year, many people did not receive notice of stimulus payments and childcare payments
Most eligible people have already received the payments. However, people who are missing stimulus payments should look for stimulus deposits from January and February 2021. They should also look for child care payments from July to December 2021. All of these should have been directly deposited into your account. 

3. Missing W-2 forms and interest and dividend form 1099
With some areas seeing mail delays, the Internal Revenue Service reminds taxpayers to double-check to ensure they have all of their tax documents, including Forms W-2 and 1099, before filing a tax return. Many of these forms may be available online. However, when other options aren’t available, taxpayers who haven’t received a W-2 or form 1099 should contact the employer, payer, banks, broker, or issuing agency directly to request the missing documents before filing their tax return.

4. Contributions made in 2021
Charitable contributions are one of the best tax-saving opportunities available. Not only does the charity benefit, but taxpayers enjoy tax savings by deducting part or all of their contributions on their tax returns. To make use of these deductions, ensure you properly check and provide payment records and receipts from charities during the year.

5. Mortgage statements with interest paid and real estate taxes paid
Your monthly payment likely includes principal, interest, taxes, and insurance, depending on how your mortgage is set up. The good news is that you can deduct interest paid from your gross income, according to the IRS. Additionally, property taxes on your home and the land it sits on can also be deducted if you bought the house during the tax year. Contact your mortgage company to get a copy of the mortgage statements showing the interest and real estate taxes paid. 

Michael J. Berger and Co., CPA’s LLP is an accounting and CPA Firm in Long Island, NY, that you can trust! Our team provides personalized accounting and tax services to small and medium-sized businesses. We also do personal tax returns in Long Island, NY, for current and prior years. When you work with our firm, we ensure that all of your accounting and tax issues are handled professionally. Our highly experienced team is committed to offering excellent service when it comes to planning and creative accounting, and tax work. In addition to accounting and taxes, our team can also help you with estate planning in Long Island, NY, as well as a variety of other financial services. Visit our website to learn more or contact Michael J. Berger and Co., CPA’s LLP, today!