Tax Season 2022 Highlights, Useful Links

The IRS is expected to begin accepting 2021 tax returns sometime between January 24th and January 31st, however, a delayed start date for the 2022 tax season is a possibility. The IRS has been backlogged for the past year due to a combination of short staffing and an increased workload. Updates will be posted as the IRS officially declares the "launch" date for accepting electronically filed tax returns .

The most significant changes to date for the 2022 tax season will impact those of you claiming dependent children, especially if you received advanced payments towards your 2021 Child Tax Credit or if you plan to take a credit for childcare expenses. The Recovery Rebate Credit will be available once again to claim all or a portion of the third stimulus payments, if you are eligible to do so. As with tax year 2020, a deduction for charitable contributions will be available for non itemizers on 2021 returns. Unemployment compensation received in 2021 will be fully taxable, unless last minute changes to tax legislation are made. These subjects are discussed in more detail below.

If you received the Advanced Child Tax Credit payments in 2021, you will need to know the amounts paid to you in order to file your 2021 tax return. While these payments are not taxable, your 2021 Child Tax Credit will be reduced by the amount of the advanced payments you received. The advance payments were intended to equal half of the amount of the credit you will be eligible to claim on your 2021 return. The 2021 child tax credit amounts are 3600.00 per child ages 5 and under and 3000.00 per child ages 6-17. As an example, if you claim one child under the age of 5 and were paid 1500.00 in advance payments during 2021, you will receive an additional 1500.00 credit when you file your 2021 return (3000.00 minus the 1500.00 advance payment). The IRS will be mailing individual letters to reflect the amount of advanced payments that must be reported on your return. You may also use the IRS portal to look up the amount of payments you received by clicking the following link: Child Tax Credit Update Portal | Internal Revenue Service

The Child and Dependent Care Credit has been significantly increased for the 2021 tax year. You may claim up to 8,000 of expenses paid for the care of one qualifying person, and up to 16,000 in expenses paid for the care of two or more qualifying persons. This credit may be worth up to 4,000 if you claim expenses for one person and up to 8,000 if you have two or more qualifying persons. This credit has also been made refundable on 2021 tax returns, meaning it will be added to your total refund if the credit amount is more than your calculated tax. In the past this credit was non refundable and could only be used to decrease your tax, meaning any portion of the credit not needed to cover your tax was lost. For more info visit: https://www.irs.gov/newsroom/child-and-dependent-care-credit-faqs

The Recovery Rebate Credit may be claimed on 2021 tax returns by eligible individuals who did not receive the third Economic Impact Payment in 2021.You may also claim the credit if your third stimulus payment amount was reduced based on your 2020 income, providing your 2021 income is lower than the previous year and does not exceed the income limit. The full amount of the third Economic Impact Payment was 1400.00 for each person listed on your tax return, including dependents. These payments would have been reduced if your 2020 income was over 150,000 and your status was married filing jointly, over 120,000 for head of household and over 75,000 for single or married filing separately. Visit Get My Payment | Internal Revenue Service/ for information on how to check the amount and or status of your payment.

Charitable contributions made to qualifying charitable organizations of up to 300 (600 if married filing jointly) may be claimed as a deduction from your income, even if you are not able to itemize. This temporary tax law was enacted for 2020 tax returns and has been extended to include the 2021 tax year. This deduction pertains to cash donations only, clothing and household items donated are not eligible for this special provision.

Unemployment Compensation received in 2021 will be fully taxable. The 10,200 exclusion of benefits received in 2020 has not been extended for the 2021 tax year at this time. It was not until March of last year that congress passed the legislation allowing for this exclusion of benefits. With this in mind, it is a possibility this could change prior to the end of the 2022 tax season.