2022 Tax Season and What to Know

2022 Tax Season and What to Know

February 01, 2022
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Tax season is always a stressful time. If you had trouble processing your 2020 tax return last year, you are probably dreading filing this year even more. Now that tax season is upon us, it’s time to start buckling down and preparing for filing. Continue reading to learn what you need to know for the 2022 tax season.

When is the IRS starting to take returns?

The IRS already began accepting 2021 tax returns on January 24th of this year so as soon as you’re ready to file, you can!

What’s the deadline to file?

The filing deadline for 2021 tax returns or to file an extension is Monday, April 18th. Typically, the last day to file is April 15th, known as Tax Day, but this year the Emancipation Day holiday and the Patriots’ Day holiday causes a delay. If you file an extension, you will have until Monday, October 17th, 2022 to file your return.

When should I expect my tax refund?

Most people who are supposed to receive a refund will receive it within 21 days of electronically filing if they choose the direct deposit option. If your refund involves the Earned Income Tax Credit or the Additional Child Tax Credit, the IRS by law cannot issue refunds until mid-February even if the return was filed prior to that.

The deduction for cash charitable contributions has been increased

If you gave cash to a charity in 2021 and take the standard deduction, you can still deduct up to $300 for single filers and $600 for joint filers. For the 2020 tax year, the limit was $300 for both single and joint filers.

Child and dependent care is fully deductible

There are two changes to this credit for the 2021 tax year. The amount of allowable credit has increased to $8,000 for one dependent and $16,000 for two dependents. This can include out-of-pocket expenses for child care, day camps, and any type of dependent care. The other change is the credit is fully refundable as long as the taxpayer meets specific requirements. Fully refundable means that taxpayers can receive the full credit amount even if they do not pay any taxes.

Taxpayers need to reconcile the Child Tax Credit

Under the American Rescue Plan, many Americans received advance payments for the Child Tax Credit so they did not have to wait until tax season to receive this credit. In March of 2021, the amount was increased and eligibility was expanded so more families could qualify. Half of the credit was dispersed in advance via monthly payments starting in July through December. The other half is a part of the tax refund.

To know the correct amount you have remaining, you should have received an IRS Letter 6419. This form will assist you in reconciling the amount you receive in advance of the Child Tax Credit.

On the flip side, you may also owe the IRS for excess Child Tax Credit payments. This could easily happen for divorced or unmarried parents who alternate claiming dependents on their tax returns. This could have also occurred because the advance Child Tax Credits were based on 2020 tax returns and your new income exceeds the thresholds. The current thresholds are $40,000 for single filers, $50,000 for head of household filers, and $60,000 for joint filers. If your income is above these thresholds, contact a tax professional to consult on what to do to pay the IRS back.

If you are worried about filing your 2021 tax return correctly, contact me for help at (402) 454-7204 or email me at jason@fp-wealth.com, so I can help make sure you have all the proper forms and take advantage of all deductions & credits possible. Give me a call today to get started!

 

Sources:

https://www.irs.gov/newsroom/2022-tax-filing-season-begins-jan-24-irs-outlines-refund-timing-and-what-to-expect-in-advance-of-april-18-tax-deadline

https://www.usatoday.com/story/money/personalfinance/2022/01/24/irs-tax-season-2022-start-date/6607276001/

https://www.washingtonpost.com/business/2022/02/04/tax-season-2022-refund-return-backlog-advice/

https://news.yahoo.com/taxes-2022-important-changes-to-know-164333287.html