As 2021 comes to an end.....
2021 was an interesting year! From stimulus checks to tax breaks, to advance payments, it is hard to keep all this straight. Here are some key items for you to consider before you file your 2021 tax returns.
Economic Impact Payments and claiming the Recovery Rebate Credit
If you didn't qualify for the third Economic Impact Payment or did not receive the full amount you may be eligible for the Recovery Rebate Credit based on your 2021 tax information. You'll need to file a 2021 tax return, even if you don't usually file, to claim the credit.
You will also need the amount of your third Economic Impact Payment and any Plus-Up Payments received to calculate your correct 2021 Recovery Rebate Credit amount when you file your tax return. Ensuring you use the correct payment amounts will help you avoid a processing delay that may slow your refund.
In early 2022, the IRS will send Letter 6475 that contains the total amount of the third Economic Impact Payment and any Plus-Up Payments received. You should keep this and any other IRS letters about your stimulus payments with other tax records. You can also log in to your IRS.gov Online Account to securely access your Economic Impact Payment amounts.
Charitable deduction changes
Taxpayers who don't itemize deductions may qualify 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.
Check on advance Child Tax Credit payments
Families who received advance payments will need to compare the advance Child Tax Credit payments that they received in 2021 with the amount of the Child Tax Credit that they can properly claim on their 2021 tax return.
Taxpayers who received less than the amount for which they're eligible will claim a credit for the remaining amount of Child Tax Credit on their 2021 tax return. Taxpayers who received more than the amount for which they're eligible may need to repay some or all of the excess payment when they file.
In January 2022, the IRS will send Letter 6419 with the total amount of advance Child Tax Credit payments taxpayers received in 2021. People should keep this and any other IRS letters about advance Child Tax Credit payments with their tax records.
Eligible families who did not get monthly advance payments in 2021 can still get a lump-sum payment by claiming the Child Tax Credit when they file a 2021 federal income tax return next year. This includes families who don't normally need to file a return.
Always remember to go to www.irs.gov for any assistance!
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