2021 Tax Filing Tidbits
/Filing season for the 2021 income tax year has begun. Once again, there was a stimulus payment in March, unprecedented advanced child credit tax payments running from June through December, as well as other tax law changes that are simply too much to cover in this newsletter. However, rest assured, we are ready for it! Below are some tax tidbits for you:
Advanced Child Tax Credit
In December, the IRS began mailing Letter 6419 to each taxpayer who received advanced child tax credit payments from June through December 2021. Joint filers should expect to receive two, with half of the payments applied to each spouse.
Unfortunately, the letters may provide inaccurate and outdated information, especially for taxpayers who have moved, changed bank accounts, or if their checks or direct deposit payments were undeliverable. Taxpayers should provide the actual amount of the checks and deposits received to your tax preparer.
While it takes time, upload capabilities, and a credit bureau check, taxpayers who received the advanced payments may view their child tax credit payments by establishing an online Child Tax Credit Update Portal account following the links from the home page of the IRS website (IRS.gov). As of January 31, 2022, payment information required to file 2021 tax returns with the credit is available in the online account.
Bear in mind, the credits were calculated based on information from taxpayers’ previous returns. It is possible the taxpayer may have received too much or too little. Therefore, taxpayers will be required to reconcile any advanced child tax credit payments received on their 2021 tax returns. Overpayment of the advance will be considered tax due.
Stimulus Payments
For those who qualified, the third Recovery Rebate Credit stimulus check was issued in March 2021 for $1,400 per person (including dependents). In January, the IRS began issuing Letter 6475 with details regarding the payment. The third payment will be used to determine if you received the correct amount. If you did not, you will receive a tax credit to make up the difference when you file your 2021 income tax return. If you received more than you should have, you will not be required to pay it back to the IRS. You should provide the amount received to your tax preparer.
Filing Deadlines
The filing deadline to submit 2021 tax returns and pay tax owed is Monday, April 18, 2022, for most taxpayers. The due date is April 18, instead of April 15, because of the Emancipation Day holiday in the District of Columbia. Taxpayers requesting an extension will have until Monday, October 17, 2022, to file, but will face penalties if payment of the tax due is not submitted by April 18.
- Pam Smitson, CPA, CGMA, Smitson Erhart-Graves Financial Advisors
