While next year’s tax season is still a few months away, taking steps now to make sure you’re organized and prepared can save you time, headaches, and even money later. The South Carolina Department of Revenue (SCDOR) offers the following tips and reminders for both tax professionals and individuals.
Tips for tax professionals
• Renew your IRS-issued Preparer Tax Identification Number (PTIN) – If you plan to serve as a tax preparer in 2022, you are required to obtain your PTIN by December 31, 2021. Both renewals and new applications usually take about 15 minutes and cost around $36. Get started at irs.gov/PTIN.
• Learn more about the SCDOR’s direct deposit refund option – The SCDOR strongly recommends that individuals choose to receive their Income Tax refund by direct deposit. As a tax preparer, make sure your clients know about and have the option to choose direct deposit before you submit their returns.
• Review your business information security plan – The Federal Trade Commission’s Safeguards Rule requires financial institutions to establish and follow a written information security plan to protect sensitive customer information.
• Register for e-News for Tax Professionals and subscribe to quick alerts from the IRS, and email newsletters from the SCDOR.
• Revoke power of attorney or third-party authorization forms for taxpayers who are no longer clients – This helps safeguard taxpayer records.
Tips for individuals
• Wait until you have the right documents before filing – Wait until you have your employer-issued W-2s, 1099s, and other Withholding information before you file your return. Don’t file using a year-end pay stub, which may not match what your employer reports to us. If that happens, it will slow down return processing, which will delay your refund.
• Know when the IRS and SCDOR will begin accepting returns – The SCDOR will announce the first day to submit state returns once the IRS announces the date for federal returns. Even if you file before we begin accepting returns, we won’t begin processing your return and refund until the season-opening date.
• Organize your records – Take time to gather your important documents before you start the filing process. That includes W-2s, 1099s, receipts, medical bills, and any other document that will affect your return. Gather your gas and vehicle maintenance receipts if you plan to claim the Motor Fuel Credit. Store these documents in a secure place, and maintain accessible backups.
• Review electronic filing and refund options – Filing your return electronically and receiving your refund by direct deposit saves you time, increases security, helps you avoid errors, saves tax dollars, and gets your refund in your bank account as quickly as possible. During the 2021 tax season, 93 percent of returns were filed electronically, and 87 percent of taxpayers who received a refund got it through direct deposit. If you use a tax preparer, make sure you ask to receive your refund through direct deposit before your preparer submits your return.
• Get to know MyDORWAY – Our free online tax portal is the fastest, easiest way to make a payment. If you don’t have a MyDORWAY account and don’t expect to make recurring payments, you can pay what you owe without logging in. If you need to make estimated payments throughout the year, we recommend signing up for a free account.
• Review tax credits and deductions that you may be eligible to claim – If you’re eligible, tax credits can be used to offset your tax liability. During the last tax season, we highlighted several of our most common credits and deductions, including benefits for families, homeowners, small business owners, agribusiness operators, summer tax situations, and education-related expenses. Keep in mind that for many credits, the amount will change for this filing season.
• Pay special attention to the Earned Income Tax Credit (EITC) – The EITC helps low- to moderate-income workers and families get a tax break. South Carolina’s EITC increases to 83.33 percent of the federal credit this year. You must be eligible for the federal EITC to claim the state credit. Use the IRS eligibility tool to see if you qualify for the federal credit.
• Protect against identity theft – Do not share personal information, such as your SSN, bank account information, or refund amount online or in social media posts. Make sure your computer is protected with strong passwords, updated operating systems, and security software. Find tips at dor.sc.gov/securitycenter.