As the tax filing deadline approaches, the LMC tax team wanted to share some changes in the tax law that might affect you:
Changes to the charitable contribution deduction
Taxpayers who don’t itemize deductions may qualify to take a 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 that received advance child tax credit payments will need to compare the advance payments that they received in 2021 with the amount of the child tax credit 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.
- Eligible families that 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 that don’t normally need to file a return.
In January 2022, the IRS sent Letter 6419 showing the total amount of advance child tax credit payments taxpayers received in 2021. Please keep this and any other IRS letters about advance child tax credit payments with your tax records to share with us. You can also create or log in to an IRS.gov online account to securely access your child tax credit payment amounts.
Economic impact payments and claiming the recovery rebate credit
Individuals who didn’t qualify for the third economic impact payment or did not receive the full amount may be eligible for the recovery rebate credit based on their 2021 tax information. You will need to file a 2021 tax return, even if you don’t usually file, to claim the credit.
Individuals will need the amount of their third economic impact payment and any plus-up payments received to calculate their correct 2021 recovery rebate credit amount when they file their tax return.
The IRS is in the process of sending Letter 6475, which contains the total amount of the third economic impact payment and any plus-up payments received. Please keep this and any other IRS letters about your stimulus payments with other tax records. You can also create or log in to an IRS.gov online account to securely access your economic impact payment amounts.
As for refunds, the IRS is saying that it anticipates that most taxpayers will receive their refund within 21 days of when they file electronically, barring any issues with processing their tax return. However, just this month, the National Taxpayer Advocate told Congress that as of the beginning February 2022, the IRS had a backlog of more than 23 million pieces of unprocessed paper correspondence.
Please reach out to your LMC professional with any questions or concerns regarding these changes in the tax law.