Top Issues to Consider When Reviewing Your Tax Return

May 8, 2023 Author: Tess Downing, MBA, CFP®, Complete View Financial

Review Tax Return

When it comes to reviewing your tax, there are several important issues to consider to ensure that you are taking advantage of all the available deductions and credits:

  • Are you recently divorced or has your spouse passed away recently? 
    • If so, review your filing status (located at the top of Form 1040).
  • Did you take the standard deduction of $12,950 (single) or $25,900 (MFJ) listed on Form 1040, Line 12? 
    • If so, consider whether bunching charitable contributions and/or certain expenses (e.g., medical expenses and property taxes) into one tax year may allow better itemization.
  • Was there any AMT (Form 6251)? Review strategies to reduce AMT, such as minimizing large capital gains or harvesting losses. 
    • If you paid a significant amount of AMT in 2021, check Form 8801 to see if you received a credit.
  • Have you ever made a non-deductible IRA contribution (Form 8606)? 
    • If so, make sure the cost basis is being tracked properly.
  • Did you reach your Required Beginning Date in 2022 or before, or do you have an inherited IRA? 
    • If so, make sure that your RMD has been satisfied and that it has been reported (Form 1040, Lines 4a and 4b or 5a and 5b).
  • Did you roll over retirement funds during the tax year from one account to another (e.g., 401(k) to IRA)? 
    • If so, ensure that it is treated as a rollover and not a taxable distribution by verifying that Form 1040, Line 4a or 5a, shows the amount of the rollover. Form 1040, Line 4b or 5b, should be $0 if no taxable distributions occurred.
  • Are there state-specific issues that should be considered? 
    • Many states offer tax benefits to retirees, such as not taxing Social Security and/or pensions, and 529 contribution deductions.
  • Do you own rental real estate? 
    • If so, review Schedule E to see what expenses you deducted on the rental property.

In summary, reviewing your tax is a crucial step in maximizing your financial well-being.