Posted in Triplett & Carothers on March 1, 2022
The IRS is encouraging taxpayers to make sure they’re well-informed about their tax situation as the filing deadline approaches. The key topics include special steps related to charitable contributions, economic impact payments, and advance child tax credit payments. Here are some key items for taxpayers to know before they file next year.
Changes to the charitable contribution deduction
Taxpayers who don’t itemize deductions may qualify to take a deduction of up to $600 for married taxpayers filing joint returns and up to $300 for all other filers for cash contributions made in 2021 to qualifying organizations.
Check on advance child tax credit payments
Families that received advance payments will need to compare the advance child tax credit payments that they received in 2021 with the amount of the child tax credit they can properly claim on their 2021 tax return:
- Taxpayers who received less than the amount for which they’re eligible will claim a credit for the remaining amount of child tax credit on their 2021 tax return.
- Eligible families that did not get monthly advance payments in 2021 can still get a lump-sum payment by claiming the child tax credit when they file a 2021 federal income tax return next year. This includes families that don’t normally need to file a return.
In January 2022, the IRS will send Letter 6419 showing the total amount of advance child tax credit payments taxpayers received in 2021. People should keep this and any other IRS letters about advance child tax credit payments with their tax records to share with their preparers. Individuals can also create or log in to an IRS.gov online account to securely access their child tax credit payment amounts.
Economic impact payments and claiming the recovery rebate credit
Individuals who didn’t qualify for the third economic impact payment or did not receive the full amount may be eligible for the recovery rebate credit based on their 2021 tax information. They’ll need to file a 2021 tax return, even if they don’t usually file, to claim the credit.
Individuals will need the amount of their third economic impact payment and any plus-up payments received to calculate their correct 2021 recovery rebate credit amount when they file their tax return.
In early 2022, the IRS will send Letter 6475, which contains the total amount of the third economic impact payment and any plus-up payments received. People should keep this and any other IRS letters about their stimulus payments with other tax records. Individuals can also create or log in to an IRS.gov online account to securely access their economic impact payment amounts.
As for refunds, the IRS is saying that it anticipates that most taxpayers will receive their refund within 21 days of when they file electronically, barring any issues with processing their tax return. However, there are other reports that there will be delays this year because of special challenges.
There’s a good chance you have other issues you should address to minimize any problems or hassle as the filing date approaches. Reach out to a qualified tax preparer to keep yourself on track.
Reach out to Roz Carothers and her team at Triplett & Carothers to learn more.