Important Tax Changes in 2022
With the coronavirus still going strong, all our lives have been affected in a variety of ways including the way we work, the way our children attend school, the way we interact in public, and the way we pay our taxes. Tax season is upon us once again. Thanks to pandemic-era legislation there are some important tax changes in 2022 that we should be aware of.
What Changes Do I Need To Know About In The Upcoming Tax Season?
THE CHILD TAX CREDIT (CTC)
The American Rescue Act was passed in March 2021 and enabled those who qualified to be eligible for monthly CTC payments. Because of these monthly payments, you may get back a smaller or larger refund than expected depending on the amount you received monthly.
If you received more through the advanced tax credit than you qualify for, you may have to repay some or all the excess payments back to the IRS when filing your taxes, but if the total tax credit that you qualify for exceeds what you have already received you can claim the remaining amount on your 2021 tax return. If you did get monthly payments you should receive Letter 6419 which will state the amount of the tax credit, which must be reported when filing your taxes.
If you received a third-round stimulus payment (economic impact payment) in 2021 the IRS will be mailing you a Letter 6475. You should receive this letter by mid-February, and you will need it to reconcile the payment on your tax return.
If you have not received a third stimulus payment, or only received a partial payment, there are a number of reasons that you may now qualify for one. A tax professional can help you determine whether you are now eligible.
Typically, you must itemize to deduct charitable contributions, but this year is different. The Coronavirus Aid, Relief, and Economic Security (CARES) Act enacted charitable giving guidelines that changed filing guidelines. For 2021, whether you itemize or take the standard deduction, you can deduct up to $300 for cash donations to qualifying charities (up to $600 combined for married filers). Previously, only taxpayers who itemized their taxes could deduct charitable contributions.
EVEN THE DEADLINES ARE DIFFERENT THIS YEAR!
Along with the pandemic-driven changes, the deadlines this year also differ from typical years. Instead of the usual April 15th deadline, most states have adopted the deadline of April 18. Maine and Massachusetts are the exceptions to that rule. Due to Patriots’ Day, a holiday observed by both states, their deadline has been extended to April 19.
Do I really need an Accountant?
If your taxes are simple and straightforward there are several programs out there that can help guide you through how to do them step-by-step. However, the last couple of years have been unusual, to say the least! With all the important tax changes in 2022, hiring a professional might be a great idea. They can look everything over for you and ensure nothing is missing,
Although we are not tax advisors, we are taxpayers; these important tax changes in 2022 are of keen interest to us! Additionally, your income taxes are a key requirement for your home loan application and approval. As your partner in the home buying process, we want to make sure you enjoy a seamless and stress-free home buying experience. The first step is making sure you have all your documentation in place.
Something else to consider is that your home purchase or sale agreement informs your tax return. Some of the transaction costs you incur such as legal fees, realtor commissions, recording and documentation fees, title insurance, and more may help ease your tax burden for the year. Have questions on your tax returns, obligations, and deductions? Please be sure to contact your Accountant. They are your best guide.
Need help starting your journey towards homeownership? Let’s talk! The team at the Law Office of Adriana E. Baudry is here to help.
Disclaimer: Please note that this blog is informational only and is not meant to provide legal advice. Each situation is different and requires informed care and decisions. Please seek guidance from a licensed attorney before proceeding with your transaction.