What to Expect from 2022 Tax Filing Season

 

The IRS has announced that tax season will be kicking off on January 24, 2022. That is the date when it will begin accepting and processing 2021 returns.

This year will be a stressful one due to the continuing pandemic. The early start date will allow the IRS to perform testing and programming that will help things run smoothly. They will be paying close attention to ensure people who receive Economic Impact Payments and Child Tax Credits are properly compensated.

The IRS is encouraging taxpayers to get prepared by having the proper documentation available. This includes:

  • W2’s from your employer
  • 1099’s from banks and issuing agencies
  • 1099-K’s, 1099-MISC and W-2’s from employers and clients if you freelance
  • 1099-INT for interest received
  • Other income documents including proof of virtual currency transactions

You should also keep track of any supporting documents concerning income.

Other documents to present include those concerning credits and deductions. Taxpayers that need to reconcile advance payments of child tax credits and premium tax credits will need their information from the previous year. Those that did not receive an Economic Impact Payment will need their third payment amounts to determine what they can claim.

Other year end documents that should be held on to include:

  • Letter 6419, 2021 Total Advance Child Tax Payment Credits which will help reconcile advance child tax payments
  • Letter 6475, your Economic Impact Payment that you can use to determine your eligibility to claim a recovery rebate credit
  • Form 1095-A, which proves you have health insurance and can be used to reconcile advance tax credits for coverage

Here are some other things to be aware of.

April 18 Filing Deadline

Most taxpayers will be looking at an April 18 tax filing deadline. This has been moved from April 15 because of the Emancipation Day holiday in the District of Columbia. Taxpayers in Maine and Massachusetts will have until April 19 to file taxes due to the Patriots Day holiday that takes place in those states. Those who file an extension will need to have their taxes completed by October 17.

What to Do If You are Waiting on Previous Returns

The pandemic has caused a backup in systems and, as a result, the IRS is still working on processing some 2020 returns. Taxpayers do not have to wait for their 2020 returns to be fully processed to file 2021 returns. They can file when they are ready.

Consider Creating an IRS Online Account

The coronavirus has caused many changes and taxpayers that have questions are picking up the phone to contact the IRS. The agency is urging people to refrain from making phone calls which further slows down systems. They are recommending that people visit IRS.gov and create an online account which will provide them with information about their taxes.

Other options to consider include free assistance at Volunteer Income Tax Assistance and Tax Counseling for the Elderly which has locations across the country.

File Electronically and Use Direct Deposit for Fast Results

If you want your refund quickly, it’s advisable to file electronically and use direct deposit. Most taxpayers who use direct deposit will get a refund within 21 days. Having all the information correct will also reduce errors.

In some cases, returns may be processed by the IRS manually. This is the case if fraud is suspected. In these instances, the taxpayer will receive a letter letting them know about the delay.

The IRS cannot issue refunds for the Earned Income Tax Credit or Additional Child Tax Credit before mid-February. However, people who are eligible may file their returns as soon as the season starts. The additional time helps the IRS avoid fraudulent refunds.

Note that there have been updates made for those that file 1040 forms. These are available on the IRS.gov website.

Free File Starts January 14

The IRS’s Free File service began on January 14. This is the time when participating providers will be accepting taxes that they will hold on to and submit to the IRS when the system opens. Free File allows people that make $73,000 or less to file their taxes electronically for free.

The Volunteer Income Tax Assistance and Tax Counseling for the Elderly also provides free filing for qualified individuals.

Keep an Eye Out for IRS Letters Concerning Child Tax Payments and Economic Impact Payments

The IRS has been sending out Letter 6419 which relates to the 2021 advance Child Tax Credit. The letter contains information ensuring the return is accurate. People who receive CTC credits can also check the amount of the payment they receive by using the CTC Update Portal on IRS.gov.

People eligible for the CTC should file a 2021 tax return to receive the second half of the credit. Those who do not receive a CTC can claim full credit when filing.

The IRS will also be sending out Letter 6475 regarding the Third Economic Impact Payments. This helps taxpayers determine if they are eligible to claim the Recovery Rebate Credit for missing stimulus payments. If so, they can file a 2021 return to receive their payment. You can check your IRS online account to confirm how much you should have received.

If you receive letter 6419 or Letter 6475, it’s important to review it. Looking over the information will prevent mistakes that may delay payments.

Other Filing Tips

Here are some other tips that will make filing easier:

  • Organize and gather your 2021 tax records including your social security numbers, Individual Taxpayer Identification Numbers, Adoption Taxpayer Identification Numbers and your Identity Protection Personal Identification Numbers.
  • Check IRS.gov for the latest tax information including updates concerning the CTC and Recovery Rebate Credit.
  • Set up an account on the IRS website to be aware of your personal tax information.
  • Make your final estimated tax payments by Jan. 18, 2022, to avoid penalties.
  • Consider setting up a bank account for direct deposit.

This information should get you ready for the coming tax season.

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