On December 7th, the Internal Revenue Service recommended that taxpayers begin taking important steps this month to make filing taxes smoother in 2022. To get ahead of the hectic tax season, we encourage you to consider the following essential items.
Check on Advance Child Tax Credit Payments
The first important step in your tax filing process is to reconcile your advance child tax credit payments on your 2021 tax return. Taxpayers who received advance Child Tax Credit payments will need to compare the tax credit they received in 2021 with the amount of the credit they claim on their tax return. If you didn’t receive the amount you were eligible for, make sure to claim the credit for the remaining amount on your 2021 tax return. If you received a total amount of advance Child Tax Credit payments that exceed the Child Tax Credit amount that you can properly claim on your 2021 tax year, you might need to repay some or all of that surplus payment to the IRS.
In January 2022, the IRS will send Letter 6419 with the total advance Child Tax Credit payments taxpayers received in 2021. Make sure to keep this letter with your important tax documents.
Claim the Recovery Rebate Credit
If you didn’t qualify for the Economic Impact Payment, you’re most likely eligible to claim the Recovery Rebate Credit. The first and second rounds of Economic Impact Payments were sent out in 2020 and early 2021, while the third round was sent out in March 2021. The third round of Economic Impact Payments, including the plus-up payments, were advance payments of the 2021 Recovery Rebate Credit claimed on a 2021 tax return. Fortunately, your 2021 Recovery Rebate Credit will reduce any tax you owe for 2021 or be included in your tax refund.
Taxpayers will need to file a federal tax return that outlines the amount of their third economic impact payment and plus-ups payments to receive a correct 2021 Recovery Rebate Credit.
Similar to the Child Tax Credit Payments, the IRS will send Letter 6475 in early 2022 that contains the total amount of the third Economic Impact Payment and any Plus-Up Payments received.
Be Aware of Changes With Charitable Deductions
Taxpayers can deduct up to $300 of cash donations per person without having to itemize, which means a married couple filing jointly could deduct up to $600 of donations without itemizing. Tax-deductible donations must meet specific guidelines, including donating to a tax-exempt organization, as defined by section 501(c)(3) and proper documentation.
Set Up Direct Deposit
No one wants to wait for a paper check to get their tax refund. Therefore, it may be beneficial to set up direct deposit through an account at an FDIC-insured bank or National Credit Union. In most cases, the IRS issues refunds in less than 21 days
Schedule a Tax Filing Consultation With US Tax Shield
With so many recent changes, you may be left scratching your head when filing your taxes. Our tax professionals can help you navigate your options and find you a resolution. We proudly saved, on average, 94% of our clients’ tax debt during 2020.
Contact US Tax Shield today for your free no-obligation consultation. US Tax Shield saves you the complexity of filing returns and does it all for you. Maximize your chances of getting a refund, and give our tax experts a call at 800-421-2721.
