Tax season is upon us and given the economic recovery the country is in, it's important now more than ever to be in the know.
The Internal Revenue Service (IRS) will begin accepting and processing federal income tax returns on Monday (January 24) –– two weeks earlier than previous years. And while theoretically the earlier you get your returns in, the earlier you get your refund, experts suggest making accuracy a priority, especially with a new wave of changes and government benefit programs.
Here are a few tips to keep in mind while gathering your paperwork and getting your taxes completed.
Child Tax Credit
According to USA Today, anyone who received the child tax credit should file a Schedule 8812 to claim any additional credit they could be entitled to.
For many households, they should be looking to receiving additional money for the child tax credit, because the advance tax credit was made to be just just half of what they're owed.
Between July and December of last year, those who qualified received the advance child tax credit amounting to between $1,500 to $1,8000 per child, depending on the child's age. So, you could be looking at receiving an additional $1,500 to $1,800 per child once you file a 2021 federal tax return.
Be extra careful when filing out how much money you received in 2021 on the Schedule 8812, USA Today noted, or else your refund could be delayed. Also, keep an eye out on a form from the IRS, Letter 6419, which will be needed to account for the money you received last year and what you're owed on your return.
A married couple filing a joint return will be receiving not one but two Letter 6419 this year, according to April Walker, lead manager for tax practice and ethics of the American Institute of CPAs, told the outlet. Both of those letters will need to be taken into account and put on the Schedule 8812.
Walker suggested looking at bank accounts and comparing to what the Letter shows you received last year. If something's off, it could be an error on the IRS' part. Don't just put in your number, Walker said. "If you put a different amount on there, it's going to flag the return," Walker added.
Anticipating Challenges and Headaches
Families who received the advanced child tax credit should take their time filing out taxes and, if possible, prepare paperwork to take to a professional.
The IRS put up this website to provide more clarity into the new forms needed this year: "Understanding your Letter 6419"
You can also check out this 21-page fact sheet from the IRS on the child tax credit by clicking HERE.
Unemployment Benefits
Unlike last year, there's no special tax break on unemployment benefits up to $10,200. In 2021, that tax break only applied for individuals whose modified adjusted gross income was less than $150,000 in 2020 and those who got unemployment benefits last year.
This year, unemployment benefits will be taxable on the 2021 federal income tax return. If you didn't have taxes withheld from the unemployment benefits, be on the lookout for a higher tax bill than you might have expected.
Important Dates and Resources
The federal income tax deadline is April 18, 2022. If you live in Maine or Massachusetts, the deadline is April 19 because of the observed Patriots Day holiday.
If your gross income is less than $73,000, you may qualify for free online tax software through the IRS's Free File program.
Local tax professionals and organizations may also be providing free services. Check your local libraries for information.
For more on changes to the 2021 Federal Income Tax filing from USA Today, click HERE.
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