Tax time is right around the corner, and just like every other year, tax services are advising their clients that there are some changes in 2022 to consider when sending in your 2021 income taxes.
Though this year’s changes are minor, they still affect a large portion of the population.
Naturally, the easiest way to deal with any tax change is to have your tax return prepared by a professional tax service but for those who prefer to DIY, here are a few notes on what to look out for.
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Charitable Contribution Deduction - Charitable donations made in 2021 to a qualifying charity can be non-itemized up to $300 per person or $600 per couple filing jointly. This is an increase of 100% from last year and applies to all whether itemizing deductions or taking the standard deduction.
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Child Tax Credit Payments - Recipients of monthly government child tax credit payments must reconcile those payments to determine how this will affect their tax return. Recipients should be receiving Letter 6419, which states the amount of money received in 2021 and should be compared to what each family was entitled to based on the guidelines for this credit. Families that received less than their entitlement can claim the rest on their 2021 taxes. Those that received more than they were actually entitled must state that as well. Based on amounts received and entitlement, parents may get a higher or lower tax return. Those with questions about this change should discuss it with a professional tax preparation service, as they will be helping many parents to correctly reconcile their tax forms with regard to the child tax credit.
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Recovery Rebate Credit - Anyone who did not qualify for the third Economic Impact payment sent by the government or did not receive the full amount may be able to file a recovery rebate credit for that money if they qualify. This can be calculated with Letter 6475 which states the amount of any impact funds received in 2021. Like the child tax credit reconciliation, stimulus payment recipients should reconcile based on their entitlement and how much was already received. Also, as with the child tax credit reconciliation, a professional tax service can help you calculate whether you qualify for impact funds not received so you can still get a payment.
While the tax changes for 2022 are minor, tax services still point out that they are important, especially for those who have received stimulus payments or child tax credits.
Avoid confusion with your filing by calling a professional tax preparation service that can help!