Monday, January 24, 2022, was the official start to this year’s tax season. By now, everyone should have received most of the information they need to make sure they file a complete and accurate return.
Taxpayers should have started receiving IRS Letter 6419, 2021 advance CTC, in January. The advance child tax credit payments letter helps taxpayers get the remainder of their 2021 tax credit. It includes the total amount of advance child tax credit payments taxpayers received in 2021 and the number of qualifying children used to calculate the advance payments.
If you’ve gathered your tax documents and are ready to tackle your tax return, there’s one more step you should take: becoming familiar with what’s new on the 2021 Form 1040. While the format of Form 1040 and its schedules remain similar to 2020, there are several changes. Many of these changes can be attributed to the American Rescue Plan Act of 2021 (ARP).
Starting January 3, 2022, nonprofit organizations applying for recognition of exemption must submit Form 1024, Application for Recognition of Exemption Under Section 501(a) or Section 521 of the Internal Revenue Code, electronically online at Pay.gov. Form 1024, which was previously filed using a paper version, has been revised by the IRS to allow electronic filing. There is, however, a 90-day grace period during which the IRS will continue to accept paper versions of Form 1024 (Rev. 01-2018) and letter applications.
If you’re conscientious about financial reporting, you may already have a sense of your company’s worth, but in some instances, you might need a formal business valuation, such as:
- Certain transactions: Are you selling your business? Planning an IPO? Need financing?
- Tax purposes: This includes estate planning, stock option distribution, and S Corporation conversions.
- Litigation: Often needed in cases like bankruptcy, divorce, and damage determinations.
The IRS began issuing Letter 6475, Your Third Economic Impact Payment, to EIP recipients in late January. This letter helps Economic Impact Payment recipients determine if they are entitled to and should claim the recovery rebate credit on their 2021 tax returns when they file in 2022. It contains information that can reduce errors and delays and help taxpayers or tax professionals prepare their 2021 federal tax returns.
When COVID-19 struck, many employers quickly switched to a work-from-home model for their employees. Many of them began working in a state other than where their office was located. While some workers have returned to their offices, as the pandemic drags on, more offices continue to work remotely with no back-to-office dates in sight.
When completing a tax return, taxpayers have two options: take the standard deduction or itemize their deductions. Most taxpayers use the option that gives them the lowest overall tax. Due to all the tax law changes in recent years, including increases to the standard deduction, that means taking the standard deduction – but not always. Let’s look at a few details about these two options.
Taxpayers who adopted or started the adoption process in 2021 may qualify for the adoption credit. This credit can be applied to international, domestic private, and public foster care adoption; however, taxpayers who adopt their spouse’s child cannot claim this credit.
Everyone wants to save money on their taxes, and retirees and older adults are no exception. If you’re 50 or older, here are six tax tips that could help you do just that.