BATS Xpress, LLC

No one likes to file their income taxes. The forms are confusing, with limits and rules that seem to change every year. And owing taxes can make you feel angry or anxious, depending on how big your tax bill is. But your taxes don’t have to be daunting. Our personal income tax services can make the tax process easy and smooth. 

Here are some actions that you can take to lower how much income taxes you’ll owe for 2022.

• Know which exemptions & deductions apply to your unique tax situation: “Both exemptions and deductions reduce the amount of money you owe the IRS each year,” explains Credit.com, “and can help you score a bigger refund—or at least a lower bill.” 

• Many taxpayers claim the standard deduction because there’s no hassle of keeping track of receipts. Charles Schwab noted that “after an inflation adjustment, the 2022 standard deduction increases to $12,950 for single filers and married couples filing separately and to $19,400 for single heads of household, who are generally unmarried with one or more dependents. For married couples filing jointly, the standard deduction rises to $25,900.”

• Itemize deductions if you can prove that you qualify for more than the standard amounts above. Taxpayers are responsible for providing supporting documentation for every tax deduction that they claim with the tax form 1040 Schedule A. For example, you can reduce your taxes for certain medical expenses, with records of qualifying costs. We also recently explained that donations to nonprofit organizations may be tax deductible.

• Add to your retirement account. There are different tax laws for employer-provided 401(K) plans and individual retirement accounts (IRA), including the timing of contributions to claim the tax credit. Both offer “great ways to shield income from taxes and build up savings for the future” according to Credit.com, because you can deduct your contributions from your taxes. You have to deposit the money in most retirement accounts by the end of the calendar year to qualify for tax deduction, but Investopedia explains that you can “contribute to an IRA until the tax filing deadline in April.”

• Did you know there’s also a penalty for skipping your required minimum distribution (RMD) from your retirement accounts? “Don't get caught off guard!” Schwab warns people aged 72 or older. “Make sure you've taken your RMD from your retirement accounts before the end of the year or else you face a 50% penalty on any undistributed funds.” (You can wait until April 1, 2023 if it’s your first RMD.)

• The timing of your payments are important, too. Donations are eligible for tax deductions in the month/year that they were made. Investopedia warns not to be confused if you donate on a credit card that you pay off later; the donation counts when it was given. Business owners can take advantage of this timing by buying something in December that they will use the next year. “Make upcoming necessary purchases or expenditures by the end of 2022” to take the tax deduction this year. 

We know that some of our clients like to take care of as much of their accounting for themselves as they can. So, we give tips to empower you and reduce the pain of your taxes. The professional team at BATS Xpress can take the stress out of running a business or personal expenses. Let’s talk about how we can help with your income taxes.