Tax Tips and Updates – 2022
Final 2021 estimated tax payments due by January 18
Your final estimated tax payment is due by January 18 for the year 2021, so rather than waiting for the April filing deadline, pay now to avoid possible estimated tax penalties, which apply when someone underpays their taxes.
Taxpayers who may need to make a payment to avoid a surprise tax bill include:
- Those who itemized in the past but are now taking the standard deduction
- Two wage-earner households
- Employees with non-wage sources of income
- Those with complex tax situations
- Families who received advance payments of the Child Tax Credit during 2021 but don’t expect to qualify for the credit when they file their 2021 return
Got tax questions on virtual currency transactions? IRS.gov has the answers.
The sale or other exchange of virtual currencies, or the use of virtual currencies to pay for goods or services, or holding virtual currencies as an investment, generally has tax consequences that could result in tax liability. Check out the Frequently Asked Questions on Virtual Currency Transactions.
Recovery Rebate Credit / Economic Impact Payments
Individuals who didn’t qualify for a third Economic Impact Payment or got less than the full amount may be eligible to claim the Recovery Rebate Credit. They will need to know the total amount of their third Economic Impact Payments received to calculate their correct 2021 Recovery Rebate Credit amount when they file their 2021 tax return. Ensuring they use the correct payment amounts will help them avoid a processing delay that may slow their refund. Beginning in late January, the IRS will send Letter 6475 with the total amount of the third Economic Impact Payment received. People can also view their economic impact payments using their Online Account.
Advance Child Tax Credit payments
People will need to know the total amount of advance payments they received in 2021 to compare them with the full amount of the Child Tax Credit that they can properly claim when they file their 2021 tax return. People who received the advance payments can access their online account to check the total amount of their payments. The IRS is also sending Letter 6419 to provide the total amount of advance Child Tax Credit payments received in 2021. Eligible families who 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 this year. This includes families who don’t normally need to file a return.
Charity Deduction
Nearly nine in 10 taxpayers now take the standard deduction and could potentially qualify. Under this provision, the tax year 2021 individual tax filers, including married individuals filing separate returns, can claim a deduction of up to $300 for cash contributions made to qualifying charities during 2021. The maximum deduction is increased to $600 for married individuals filing joint returns.