It’s about that time for everyone’s favorite season, and no, we aren’t talking about summer.
Sure, tax season probably isn’t what you look forward to, but it comes every year, and it’s always better when you know what to expect.
2022’s tax season might look and feel a bit different from what you may be used to, which is understandable given the fact the world has existed in precarious times these past few years.
Given the outstanding circumstances, the first big thing to note is that the Internal Revenue Service (IRS) is already processing 2021 tax returns as of January 24, 2022.
Important Things to Know for 2021 Tax Returns
But wait, there are more big things to take note of before we dive into more detailed points:
- The IRS is imploring people to submit their tax returns electronically. If you do so, you can expect less of a delay to receive tax refunds.
- Refunds can be directly deposited into prepaid debit cards, mobile apps, or bank accounts as long as you provide the IRS with the routing and account numbers when you file.
- If you’re waiting to receive a W-2, it should be sent no later than January 31, 2022.
- The deadline to file 2021 income taxes is Monday, April 18, 2022 (as opposed to the typical deadline of April 15).
- Exceptions to the deadline: For any victims of the late 2021 Colorado wildfires or December tornadoes in Kentucky, Tennessee, or Illinois, the deadline is May 16, 2022.
- If you need to file for an extension, you must do so by April 18 to push your deadline to October 17, 2022.
Who is Eligible to Use IRS Free File?
In 2021, if you earned an adjusted gross income of $73,000 or less, then you can use free tax software to electronically file your return for the 2021 tax season.
If you earned more than that figure, you can still use Free File Fillable Forms to file your returns online. Find out more here.
How Do Advance Child Tax Credit Payments Affect My Filing?
Anyone who received advance Child Tax Credit payments must file a 2021 tax return. By the end of January 2022, you should receive Letter 6419 from the IRS which will display the total amount of advance Child Tax Credit payments that you got in 2021.
Be sure to look out for this letter to help you file your returns properly.
Will There Be Stimulus Checks in 2022?
If you didn’t receive the third Economic Impact Payment or got less than the full amount in 2021, you could still be eligible for the Recovery Rebate Credit. The IRS will be sending out Letter 6475 in January with the total amount received from the third Economic Impact Payment.
Once you submit your tax returns, if you didn’t receive the full amount and were eligible to, then you may receive the difference in credit.
Are Unemployment Benefits Taxed?
In 2020, anyone with a modified adjusted gross income of less than $15,000 or unemployment benefits received a tax break. The same cannot be said in 2022.
Jobless benefits in 2021 are considered taxable.
What are the Standard Deductions?
The good news is that there’s been an increase in the standard deductions. For single filers, it’s $12,550. For married couples who are filing jointly, it’s $25,100.
We’re a bit early, but it’s also worth sharing that the standard deductions will increase again in 2023’s tax season with respect to 2022 returns. By then, it will be $12,950 for single filers and $25,900 for married couples filing jointly.
Deductions and Credits to Consider
Who doesn’t love tax deductions and credits?
When you’re filing your tax returns for 2021, keep in mind that the following may count as deductions to help lower your taxable income:
- Charitable Deductions
- Medical Deductions: Any medical expenses above 7.5% of your adjusted gross income (AGI)
- Business Deductions: For those self-employed, you can claim many deductions, including travel expenses and home office deduction. (Keep in mind that you don’t qualify for these deductions if you worked remotely as an employee.)
Tax credits are dollar amounts that are subtracted from your tax bill. Some of these include:
- Education Credits
- Child Tax Credits
- Earned Income Tax Credit
- Stimulus Check: If you received that third stimulus check of up to $1,400, it is not considered taxable income.
- Paycheck Protection Program (PPP) Loans: If you took out any PPP loans, then those loans can be deducted from your taxable income (if your loan forgiveness application was approved by the Small Business Administration)
Final Thoughts and Additional Resources
We’ve covered a lot of ground here with many updates and things to note during your 2022 tax season.
There are many resources out there to help you file your taxes or answer questions, should you have any.
Here are some articles that go into more detail about these points (and that were used as reference material):
Guess there’s no better way to end this thrilling piece than to say, happy filing! And, of course, we hope this has been helpful in one way or another.
Image(s) or Footage (as applicable), used under license from Shutterstock.com.