2022 is in the books! Here are some of the things we can expect to be dealing with on your 2022 tax return.
Lots of credits that were increased for 2020 and 2021 due to the pandemic have been reduced to their 2019 levels. This means refunds that may have been inflated due to those credits last year will be much smaller this year.
The “above the line” deduction for charitable contributions is no more. I still recommend letting me know about your charitable contributions, but for many people they won’t make a difference on their tax returns.
Municipalities are really cracking down on filings. So you might need to file a city return when you never did before.
And finally, here are a few of the forms I use in the office to help get organized.
As a courtesy to my clients who might be a little behind, here is what to remember about 2021:
The third stimulus payment, also known as the economic impact payment (EIP3): This is t2e payment that went out in the late spring/early summer of 2021 and for most people was $1400. The EIP is NOT taxable income. However we do need to reconcile your EIP on your 2021 tax return. Everyone should receive a Letter 6475 from the IRS. Please save that letter and put it with your tax stuff. For my old blog posts about EIPs please click here and then also here.
Advance Child Tax Credits (ACTC) As part of covid relief legislation, the child tax credit for 2021 was increased from $2000 per child to $3000 per child (and $3600 for children under 6 years old). But in an attempt to get money to families, 50% of the credit was paid out in advance, in monthly payments from July to December 2021. These payments MUST BE RECONCILED ON YOUR 2021 TAX RETURN. You will be receiving Letter 6419 from the IRS showing the payments you received. Please put that letter with your other tax stuff. For more information, click here.
Unemployment: Again in 2021 we have record numbers of people depending on unemployment insurance. Unemployment IS taxable income. You may recall in early 2021 there was a exemption granted for the first $10,200 in unemployment benefits received in 2020, which made the payments exempt from tax. However we are not expecting that to happen again for unemployment received in 2021. If you elected to have tax withheld from your unemployment it will help at tax time. Unemployment is also taxable to Ohio, but not for localities (cities).
Grants, PPP Loans, and EIDLs: A number of programs initiated in 2020 to help businesses were continued into 2021. If you have a business that received any government assistance in 2021 please let us know.