This is the time of year when we dream about sailing through the Caribbean. So, what’s stopping us? The tax filing deadline for one. Now that 2021 is over we are faced with the overwhelming task of gathering information needed for tax returns. A professional fiduciary can save you the time and stress spent looking for records, summarizing tax data, and pulling together the information your tax preparer needs in a timely manner. Here are a few examples.
Did your tax preparer send you a hefty tax organizer to complete?
Tax preparers want to make sure they have every tidbit of information that may affect your tax return so most of them send their clients a long, detailed form to complete. This organizer is time consuming to fill out and often confusing. Your professional fiduciary is familiar with both your situation and tax terminology so can assist you in completing the organizer quickly and easily.
Are you unsure what records your tax preparer needs?
Forms 1099 INT, W-2, K-1, SSA 1099, 1099 B, 1098, 1095-A, and year end statements will soon flood your mailbox or email. Your professional fiduciary can corral these wayward forms and make sure you received them all before submitting your information to your tax preparer. Listing every possible itemized deduction is tedious and time consuming and may be unnecessary if the standard deduction is higher. Your professional fiduciary will know what is deductible and whether you even need to itemize. Many professional fiduciaries track deductible expenses during the year and will have that information at hand when you need it.
Do you have a small business, rental property, or trust?
The recordkeeping requirements and deductions for businesses, rental property, and trusts are more stringent than personal recordkeeping. A professional fiduciary can categorize and summarize these transactions for you to submit to the tax preparer. This not only speeds up the preparation of your tax return but can save you money on tax preparation fees.
Every tax year brings changes, and 2021 returns are no different. Here are a few items to watch for this year:
- The 3rd Economic Impact Payment was approved March 11, 2021, and payments began going out later that month. This was an advance on the 2021 Recovery Rebate Credit and if you received less than the full amount, you may be eligible for an additional credit on your 2021 tax return. Review your records to confirm the amount you received.
- Even if you don’t itemize deductions, you can deduct up to $300 ($600 if filing jointly) for contributions made in 2021 to qualifying charities as long as the donations were made by cash, check or credit card. Your tax preparer or professional fiduciary can tell you if a certain charitable organization qualifies. Special recordkeeping rules apply for charitable contribution deductions, so ask your professional fiduciary for help with supporting documentation.
- Due dates for income tax returns:
- For partnerships and S corporations: March 15, 2022
- For individuals, trusts, and corporations April 18, 2022
If you don’t already have a professional fiduciary, tax time is a great time to find one. Check the member directory of the Professional Fiduciary Association of California at https://pfac-pro.org/. Then you can relax and get back to dreaming about sailing in the Caribbean.
