Tax filing season tends to be an unnerving task. The beginning of each year brings it as an assignment. Your questions about tax filing for the year 2021 in 2022 will be answered as you read on.

Are you Eligible for Tax Filing?

Whether you have to file a tax return or not for the year depends on multiple factors, including your age, tax filing status, and several others. If someone else claims you as a tax dependent is another important variable to consider.

Even if you do not qualify to file for a tax return, you may be eligible for a tax break that generates a refund for you. So, tax filing should be given due consideration. Some of the important factors to consider in this are:

- You have a withholding income tax from your paychecks

- You had last year’s refund applied to this year’s or made estimated tax payments

- You are eligible for tax credits

When Can You File Taxes in 2022?

The IRS has announced recently that the 2021 federal tax returns will be accepted Monday, January 24th, 2022 onwards. The deadline for the year is Monday, April 18th, 2022 – by this day; you must have filed the 2021 individual tax return and made payments for any remaining federal income taxes payable for the prior year. Usually, the tax filing deadline is by April 15th, but since Emancipation Day will be observed in Washington DC this year, the deadline has been moved forward.

Anyone filing for an automatic 6-month extension will have their federal filing deadline extended. The extension will, however, be only granted for filing the return but not to pay the dues owed.

Tax season is typically a busy time for the IRS, but the backlogs induced by pandemics for the past two years and further limited funds will make this tax season an even busier one.

Which year’s taxes will be filed in 2022?

You will be filing tax returns for the year 2021, in 2022.

Tax-filing Changes in 2022

Your Refund may be increased or decreased due to your Monthly Child Tax Credit Payments.

It is the first in history that the IRS is sending child tax credit in the form of monthly payments to eligible families. By the amount you receive as part of monthly child tax credit payments in 2021, you may get a larger or smaller tax refund than expected or may even owe additional tax amounts.

You must report the amount of monthly child tax credit payments received in the 2021 tax return. Letter 6419 will be sent to you that shall state the total child tax credit payment amount you received. It is recommended by the IRS that this amount should be compared with the total entitled child tax credit amount.

If the amount of total eligible child tax credit exceeds what you have received already in the forms of child tax credit advance payments, the residual amount may be claimed in the 2021 tax return. If you have already received more than the amount you qualify for, you will have to repay either some or all of the additional payments to the IRS at the time of tax filing.

The following are some cases where you may receive more than your qualifying amount in 2021:

- Your filing status or income has changed this year

- Your qualifying child does not live with you anymore or lives with another parent

- You are no longer a resident of the United States for over half of the year 2021

Recovery Rebate Tax Credits for Third Stimulus Payments

For the year 2021, you may be eligible for the Recovery Rebate Tax Credit. This is when you have received partial payment less than the full stimulus payment amount of $1400 or have not received the stimulus payment of third economic impact payment.

You should file the tax return for 2021 even if you are not required to do so typically. If your earning is generally more than a certain specified income amount and are not claimed for as dependent, Form 1040 should be filed for the tax year 2021.

No Need to Itemize Charitable Donations

Usually, itemization is done to deduct charitable contributions. However, for the year 2021, you are allowed to deduct cash donations up to $300 for the qualifying charities (this deductible amount is up to $600 for married filers), whether you take the standard deduction for the year 2021 or opt for itemization.

2021 is a significant tax year to support your favorite charity with the increased charitable donation deduction for both individuals opting for itemization as well as those who do not optimize.

Generous charity givers who itemize are also eligible for a bonus. Cash contributions can be claimed by those who claim charitable contributions as itemized deductions to qualifying organizations. The amount can be up to 100% of the AGI, i.e., adjusted gross income, for the tax year 2021 only. This deduction is only limited to 60% of the taxpayer's AGI typically.

Select your Option to file Tax

There are three ways in which you can file taxes: Filling out the IRS Form 1040, filling the Form 1040-SR by hand and sending it by mail – though not recommended, using tax software to file taxes online, or hiring a tax expert to prepare your tax filing work.

Filing Taxes Online using a Tax Software

If you have already used any tax software previously, you will have already have an idea about preparing and filing your tax returns online. A lot of tax software providing firms will often offer you free access to tax preparing personnel too.

Hire a Tax Preparer to Work With

Through tax software, it has become easier than ever to file your taxes. However, as your financial life gets complicated, you might get worried about missing out on something and prefer getting someone to help you with preparing your tax files. If you have a healthy side gig or run a business venture, or just require a better understanding of the forms, it is good to seek a professional’s help. You can get your first call scheduled here.

Understand the Science behind How Your Taxes are Determined

The government decides how much tax is payable at your end by segregating your taxable income into multiple chunks, which are called tax brackets. Each tax bracket is taxed at its corresponding rate. The beauty about this is that regardless of how much amount you have in each of these brackets, you do not need to pay that rate on your entire income. The United States follows a progressive tax system, which means that those with higher taxable incomes will be paying higher federal income tax rates as compared to those with lower taxable incomes.

Collect Your Tax Filing Information

You will have to gather your tax filing information regardless of preparing your tax files yourself or hiring a tax preparer for that. The ultimate goal of the process is to collect all the evidence of income and expenses that may get you tax credit or be tax-deductible, in addition to proof of any taxes you have already paid throughout the year.

You can use the following tax prep checklist to have a round-up of the required items.

- Property tax and mortgage interest

- State and local taxes paid

- Education-related expenses

- Unreimbursed medical expense bills

- Charity donations made during the year

- Federal and State tax returns for the previous year

- Social security numbers: you and your family (spouse, dependents)

- W-2 form

- 1099 form

- Contributions made in retirement accounts

Make IRS Settlement

If you have tax payable:

- There are multiple ways to send money to the IRS. You may use wire transfers, e-payments, checks, debit/credit cards, or cash are some of the options you have,

- If you are unable to pay your taxes altogether, you can opt for the IRS payment plan, which is a direct agreement with the agency to settle your federal tax bill payments exceeding a certain period.

There are two types of IRS payment plans – long and short term. You can usually make monthly payments to settle the payable amount.

In case you are getting a refund, some things should be taken into consideration to ensure that you get your money back as soon as possible.

1. Avoid filing tax returns on paper: IRS usually takes up to 6-8 weeks to process the paper returns. When taxes are filed online, on the other hand, the return shall be processed in around three weeks e-tax returns are also accepted by the state tax filing authorities, which means you should be able to receive your tax refunds quicker.

2. Use Direct Deposit to get your Tax Refund: When filing the tax return, you can opt for a direct refund in your bank account instead of receiving a paper check. This reduces the waiting time in the mail.

3. Track the Refund: You may track the status of your tax refund using the online portal.

References

https://www.forbes.com/advisor/taxes/3-changes-for-the-2022-tax-season/

https://abc7chicago.com/when-is-the-first-day-of-tax-season-2022-turbo-irs-filing-deadline/11449489/

https://www.nerdwallet.com/article/taxes/tax-filing

Final Thoughts

If any of the information provided above made you feel confused, don’t stress because you are not alone. There are many other businesses that have faced similar problems in the past. However, with time, they have fared well with just a little help.

If you are struggling or just don't have the time to keep up with it, it may be time to have Hall Accounting take over and invest with accurate accounting records and financial reports. The Hall Accounting team will manage your records from start to finish and make sure all adjustments are timely recorded. This option is also feasible for small businesses because it is cheap and hassle-free, at a fixed monthly rate. If you are interested, please feel free to email us at proposals@hallacctco.com and we will get you a free quote!

FUTURE IMPORTANT DEADLINES

1/24/22
IRS began accepting and processing 2021 tax returns

3/15/22
Deadline for partnerships and S-Corp returns for 2021

4/18/22
Deadline to file individual tax returns for 2021
First-quarter estimated tax payments due for 2022
Deadline to contribute to HSA for 2021
Deadline to contribute to IRA for 2021