4 tax moves to make in May
Monday, May 02, 2022
May is supposed to be the month full of flowers from the previous month's showers. Unfortunately, this year the month is starting off on a decidedly unmerry note.
In the wake of the devastating Kansas tornadoes, forecasters are warning of multiple rounds this week of severe thunderstorms, including tornadoes, across the Plains, Midwest, and South.
That's why heeding weather warnings and preparing for the potentially dangerous outcomes tops the May 2022 monthly moves list.
1. Watch for weather warnings. As noted, Mother Nature has already been on tear across the United States this year. And she just doesn't stop. Wildfires are raging in the Southwest. The official start of the annual Atlantic/Gulf of Mexico hurricane season is just a month away. Regardless of which natural disaster is common in your area, get ready now. You can find my prior posts full of readiness tips, including related tax matters, at the ol' blog's Storm Warnings page on preparing for disasters.
2. Find summer care for your kids. Now that many companies have eased their COVID-19 pandemic protocols, many workers are back in offices, at least for a few days a week. As long as schools, which also have for the most part resumed in-classroom instruction, are in session, parents don't have to worry about day time supervision of their children. But classes soon will end for the summer recess, and child care, either full-day or after-school, will become paramount.
One option for older youngsters is day camps. Expenses for day-only camps also count toward the child and dependent care credit. There are limits, both on the income for claiming taxpayers and the amount the tax credit provides, and unless Congress acts, the tax break will return to its pre-COVID smaller amounts for the 2022 tax year. Still, since it is a credit, it offers a dollar-for-dollar reduction of any tax owed.
3. Store your 2021 return material, set up a system for 2022. Regular readers (thanks!) who checked out my April post on 5 post-filing tax tasks to take care of now, know this was part of that to-do list. But good tax record keeping, either in paper form or digitally (or both if you're obsessive), is worth emphasizing again.
A key document you want to hang on to for, well, forever, is your actual Form 1040. That means that form and all its supporting forms and schedules. You also should hang onto for at least a few years the material you used to fill out that return and schedules. Not only can the forms and documents come in handy for future filings, you might need the information if you apply for a loan, claim major disaster losses, need to amend your original filing, or the Internal Revenue Service comes asking questions about something on your return.
Also set up your record keeping system for the 2022 tax year. You likely already have things like charitable donation receipts or business expenses that will affect the return you file next year. By establishing a filing method for them now, you won't have to go hunting for or trying to recreate the necessary tax documents next filing season. My post on tax document record keeping suggestions is a good template to follow, even if I say so myself.
4. Get ready to file if your Tax Day was delayed. Most of us had to send the IRS a tax return (and any tax due) or Form 4868 (and any tax due) for an extension by April 18. Some folks, however, got more time.
Don't be jealous. The reason for their delayed tax deadline is because they were hit by a major natural disaster.
May 16 is Tax Day for Colorado wildfire victims, as well folks who were in the paths of the tornado outbreak through Arkansas, Kentucky, Illinois, and Tennessee. Click on those states' names for more in my earlier posts on the special tax relief for these affected major disaster area filers.
Some Puerto Rico taxpayers get even longer to file, due to February's disastrous flooding in parts of the U.S. island territory. The IRS granted these affected taxpayers until June 15 to file their 2021 tax returns.
If you are a victim of these (or future) major disasters, I'll do my best to keep you up to date here at the ol' blog on the tax implications for your area. You also should check out the IRS' Around the Nation web page for any updates on disaster areas and the available tax relief.
More May tax moves: I know, all y'all who finished your 2021 returns were hoping to at least have May off before you had to start thinking about anything tax again. Sorry. But planning can help you make any remaining tax tasks easier. They also can help you save on your already accruing 2022 tax bill.
If any of these tax actions apply to you, make them. And if you are an enthusiastic taxpayer, also check out some additional May Tax Moves in the ol' blog's right column. As is the custom, these monthly pieces of tax advice are listed under the countdown clock that's keeping track of the countdown to Tax Day 2022.
Then, when you're done with all the tax moves that apply, have the merriest May ever.
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