6320 West Forest Home Avenue
The 2021 TY Postcard is a great reminder that the tax season is upon us. It can also convey some high level points to be aware of for the current year. Where the post card comes up short is in providing a number of details and being able to make adjustments quickly after the tax season has begun. Hopefully you are here because you read the postcard and following the directions to come to the website for the full and complete details on this upcoming tax season. Thank You!
The 2022 Tax Season, completing 2021 Tax Year Returns, looks like it will be starting like a normal tax season. The IRS has announced that the E-File system will open on January 24th. This is right in line with prior years (excluding 2021). As always, you may come into the office and have your tax return prepared prior to this point. We will E-File your tax return and it will be transmitted once the E-Filing window opens.
As for how we will be preparing taxes in 2022, the answer is that we will have a hybrid model in place. Acc-U-Rite Tax has always been a live, in person tax preparation company where we prepare your return while you sit at our desk. Preparing the tax return while you are at the desk and able to answer questions has worked exceptionally well over the decades. In March, 2020 we had to convert our entire operation to a drop off only model. This continued for the remainder of the tax season (which ended on July 15th, 2020) and was also in place for the entire 2021 tax season. Many people found this to be convenient and wanted to continue using this option. In light of the current pandemic situation, and especially considering the current spread of the Omicron variant, we wanted to provide an option for anyone who wished to use the same system as last year and minimize their time spent in the office. For anyone who wants to sit down in person, that is once again an option.
The issue of Masks. Each individual can decide whether to wear a mask or not. If a tax client would like to sit at a desk and have the tax return prepared live, and also requests that the tax preparer wear a mask, the tax preparer will wear a mask upon request.
Many of the changes that come into play for the 2021 tax year revolve around the children reported on the tax return. One of the largest changes has been the Advance Child Tax Credit paid out in monthly payments from July through December. These are advance payments of the tax credit that you would normally receive on your tax return. Because you are receiving this payment in advance, that means your total tax will most likely be HIGHER than usual. If your withholding stays the same as the prior year it is likely you will see a reduced refund or potentially owe tax when your return is complete. The IRS will be mailing out Form 6419 to every person who received any money in advance. For married couples, they will be sending a form to EACH SPOUSE! It is important that we see BOTH Forms 6419 because they only provide half of the information on each form.
In March, 2021 the American Rescue Act authorized a third stimulus payment of $1,400 per person. Once again we will have to reconcile the payment you received on your tax return. It is NOT Taxable income. However, if you did not receive the payment, or got a smaller amount as part of the phaseout, you may be eligible to get the remainder of the stimulus payment provided your income for 2021 is within the income limits. You should receive Form 6475 in the mail and we will need that to reconcile your account.
The 2020 tax returns had so many changes that were implemented in March, 2021 due to retroactive tax law changes from the American Rescue Act. Because of these last minute changes the IRS had to MANUALLY adjust many tax returns. Add in the responsibility of setting up and implementing the Advance Child Tax Credit payments and the IRS understandably fell very behind in paperwork processing. The IRS is still processing tax paperwork at this point in time (late January, 2021) and the expectation is that the IRS will be behind throughout this next tax season. Therefore it is IMPERATIVE to ensure that the amounts we are reporting for the stimulus payments and the Advance Child Tax Credits are absolutely accurate, otherwise the IRS will have to manually pull your tax return and review it. Since there are millions of returns sitting and waiting to be processed already, this manual review could result in delays that could be three months, six months, nine months or even longer before you see your return fully processed. This is why the data has to match the IRS system.
The American Rescue Act, enacted on March 11, 2021, provided a one year only Unemployment Compensation Exclusion of $10,200 of unemployment income for tax year 2020. This was for a single year only! For 2021, this exclusion is NOT in effect and ALL of your unemployment will be taxable. Be sure to get your 1099-G form for your tax return.
If you had health insurance through the Marketplace, you will receive a 1095-A form. We need that form for your tax return.
E-Filing will be open as of January 24, 2022. Per Federal Law (PATH Act) ANY return containing the Earned Income Tax Credit or the Additional Child Tax Credits will have the refunds delayed by the IRS until February 15th or later.
I hope this helps to provide a greater amount of detail than what can be conveyed in the post card.