Generally speaking, tax return mistakes are a lot more common than you probably realize. Taxes have grown complicated and COVID tax relief has made many changes; the paperwork required to file proper tax returns is often convoluted. This is especially true if you're filing your taxes yourself.
The 2020 tax year certainly does not qualify as a "normal year" and 2021 was not any better together with the backlogs from 2020 tax year.
Congress passed numerous tax laws before, during and after 2020 that apply to 2020 as well as 2021, making it two of the more complicated tax years in recent memory. Even seasoned tax professionals had a hard time digesting all of the changes that they and their clients are now dealing with, requiring hours of continuing education. All of this is to say that if you've just discovered that you've made a significant mistake on your tax return, the first thing you should do is stop and take a deep breath, and then call us. It happens. It's understandable. There are steps that you can take to correct the situation quickly — you just have to keep a few key things in mind, including that the mistake could be in your favor.
December 1 - Employers
During December, ask employees whose withholding allowances will be different in 2022 to fill out a new Form W4 or Form W4(SP).
December 15 - Social Security, Medicare and Withheld Income Tax
If the monthly deposit rule applies, deposit the tax for payments in November.
December 1 - Time for Year-End Tax Planning
December is the month to take final actions that can affect your tax result for 2021. Taxpayers with substantial increases or decreases in income, changes in marital status or dependent status, and those who sold property during 2021 should call for a tax planning consultation appointment.
December 10 - Report Tips to Employer
If you are an employee who works for tips and received more than $20 in tips during November, you are required to report them to your employer on IRS Form 4070 no later than December 10. Your employer is required to withhold FICA taxes and income tax withholding for these tips from your regular wages. If your regular wages are insufficient to cover the FICA and tax withholding, the employer will report the amount of the uncollected withholding in box 12 of your W-2 for the year. You will be required to pay the uncollected withholding when your return for the year is filed.
On November 19, 2021, the House of Representatives passed their proposed version of President Biden’s Build Back Better Act, which was substantially pared down from the original version. The Senate will now take up the legislation, and without question there will be changes.
Then the Senate-altered version will have to go back to the House and a compromised version negotiated before a final bill can go to the President’s Desk for his signature. Reliable sources indicate a final bill will not be available until towards the end of the year.
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