The Internal Revenue Service (IRS) has released important information to taxpayers about steps they can take now to make filing their 2021 tax returns easier in the spring of 2022.* Filing taxes in April may be different than it has been in the past because of these three pandemic-related changes:
1. Economic Impact Payments
If you didn't qualify for a third Economic Impact Payment or didn't receive the full amount, you may be eligible for a Recovery Rebate Credit based on your 2021 tax information. If you don't normally file a tax return, you'll have to do so this year if you want to claim the credit.
Early in 2022 you will receive Letter 6475 from the IRS that will contain the total amount of your third Economic Impact Payment, plus any other Plus-Up Payments (additional payments from the IRS to people who were eligible for a larger amount). This letter should be kept in your tax paperwork so when you're ready to file, you'll have the correct payment amounts to include on your return.
2. Child Tax Credit Payments
Millions of families with children under age 18 received some financial help from the federal government this year. If you met certain income limits and have a qualifying child or children under the age 18, along with meeting other qualifications, you may have received advance Child Tax Credit payments in 2021. If you received less than the amount for which you're eligible, you'll need to claim a credit for the remaining amount on your 2021 tax return. Likewise, if you received more than the amount for which you're eligible, you may need to repay some or all of the excess payment when you file in April 2022.
In January 2022 the IRS will send notice in Letter 6419 with the total amount you received in 2021. Keep this letter in your tax paperwork so when you file, you can figure out whether you're entitled to a credit or need to repay a certain amount.
For instructions on handling the Child Tax Credit payments you received in 2021, check out this IRS FAQ.
3. Charitable Deductions
Like last year, the federal government is rewarding Americans for donating to charity. It's allowing Americans who are claiming a standard deduction on their 2021 tax returns to take a charitable 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. (Ordinarily charitable deductions can only be taken when filers itemize their deductions on their tax returns.) This tax break not only does good for a charitable organization, it's good for your wallet and can help reduce your taxes. Learn more about this special tax provision here.
Hanscom FCU Charitable Foundation is a 501(c)(3) non-profit organization that serves organizations within our community that are dedicated to improving the lives of those around them. The Foundation supports organizations in the areas of health, education, and well-being of children; homelessness prevention services; and programs for veterans and their families. One-hundred percent of what we raise is donated with nothing deducted for administrative fees. Here's how you can support us!
*This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax advice. Please consult a tax professional for specific information regarding your individual tax situation.
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