The last of the confetti has been picked up and all the holiday decor is packed away. Time to start planning for a productive new year. For most federal employees, that includes tax preparation so you can make the most of your federal benefits. Federal Educators shares our recommendations for the first 4 things to check off your federal benefits to-do list as we enter the new year.
- Review your 2021 W-2 tax statement.
Federal employees will receive their 2021 W-2 statements in January 2022. This document will include information on an employee’s taxable wages and all Social Security and Medicare wages earned during the 2021 calendar year. It’s imperative to review this form for accuracy, especially on the following items:
- All federal and state income taxes withheld during 2021
- Social Security (FICA) and Medicare Part A payroll taxes withheld during 2021
- Any employee contributions made through payroll deduction to your TSP and/or Roth TSP during 2021
- Any employee contributions made to the Federal Health Benefits (FEHB) health plan program during 2021
- The taxable amount of agency paid FEGLI life insurance premiums
Might we suggest this tip? Federal Educators recommends that employees compare the information given on the 2021 W-2 statement with the employee’s last “leave and earnings” statement for 2021 (usually given in late December 2021) under “year to date” for all items.
- Make your 2021 IRA contribution.
If you did not make your 2021 IRA contribution during the 2021 calendar year, you still have time (until April 15, 2022) to make one for yourself and if married, a spouse. The maximum contribution is $6,000 if under 50 years old or $7,000 if over age 49 as of December 31, 2021. All federal employees are eligible to contribute to a nondeductible traditional IRA. There are also no income restrictions. However, Roth IRAs do carry income restrictions. The Federal Educators financial team can help you navigate the difference through our benefits analysis.
- Review your Social Security retirement and disability benefits statement.
Did you know that you can create your own account on the Social Security website? This allows the employee to download a current benefits statement at any time. There, an individual’s calculated disability benefits appear as a monthly dollar amount to be paid should a disability occur. Other items include the individual’s calculated monthly retirement at age 62, full retirement age (FRA) and at age 70. Most importantly, because all employees’ Social Security earnings are reported on the W-2 statement, we encourage everyone to download their Social Security benefits statement by Summer 2022 to ensure that their 2021 Social Security earnings were reported correctly.
- Evaluate changes to your 2022 federal and state income tax withholdings.
Now is a great time to decide on any adjustments to your 2022 federal and state income tax withholdings from payroll. Employees that plan to contribute more to the traditional TSP (contributions made with before-taxed salary) may consider reducing their federal and state tax income withholding. Conversely, any employee that wishes to contribute more to a Roth TSP with an after-taxed salary would want to increase their withholdings. Through our free benefits analysis, Federal Educators can help you determine what works best for your financial situation.
If you are ready to start the new year with a cha-ching instead of a bang, Federal Educators can provide you with the perfect combination of educational resources and a knowledgeable team. Call our St. Petersburg office at (813) 544-2908 to get started today.
