Filing a U.S. Tax Return for the First Time in 2022? Here are Some Important Considerations

Articles/News, Offshore Account Update

Posted on January 31, 2022 |

On January 13, 2022, the Internal Revenue Service (IRS) published a Tax Tip titled, “Here Are Reasons People Who Don’t Normally File Should File a 2021 Tax Return.” The Tax Tip goes on to explain various reasons why taxpayers may be entitled to refunds, and it discusses the opportunities that are available for first-time filers to claim child tax credits and recovery rebate credits, among others. But, what the IRS’ Tax Tip doesn’t explain is that filing for the first time can be risky if you should have filed in the past. With this in mind, here are some important considerations for first-time filers in the U.S. and abroad from New Jersey tax attorney Kevin E. Thorn, Managing Partner of Thorn Law Group:

Should You Have Filed a Federal Income Tax Return Prior to 2022?

An important consideration for anyone who is filing their first federal income tax return is whether they should have filed a return in the past. If you are behind on your federal reporting or payment obligations, this is an issue that you will want to address proactively—before your 2022 return triggers an IRS inquiry. There are a few different options for correcting past filing deficiencies, and those who are behind will want to consult with a New Jersey tax attorney to ensure that they are choosing the best option for their individual circumstances.

Do You Have All of the Information You Need to File an Accurate Return?

While you might be filing in order to collect a refund or take advantage of a credit, you need to include all relevant information on your return. This includes information about your income from all sources—including wages, salary, commissions, gig economy work, cryptocurrency transactions and other investments. Failing to report taxable income is a form of federal tax fraud, and it can lead to steep penalties.

Do You Have Offshore Accounts or Other Assets that Require Disclosure?

In addition to reporting their taxable income to the IRS, many taxpayers in the U.S. and abroad have other reporting obligations as well. One of the most common examples is the obligation to report offshore accounts and other foreign assets. Depending on the nature and value of a taxpayer’s foreign holdings, the taxpayer may need to file a Report of Foreign Bank and Financial Accounts (FBAR), IRS Form 8938 or both.

If you are behind on your foreign asset disclosures, this is another issue that you will want to address before the IRS comes calling. For most taxpayers, this involves making a voluntary disclosure.

Request a Confidential Consultation with New Jersey Tax Attorney Kevin E. Thorn

If you have any questions or concerns about what you need to disclose to the IRS, we encourage you to get in touch. To schedule a confidential consultation with New Jersey tax attorney Kevin E. Thorn, Managing Partner of Thorn Law Group, please call 201-355-8202, email or inquire online today.

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