*Editor’s Note: CC Biz Buzz is a monthly column series that features insightful commentary from a member of the Columbia College Robert W. Plaster School of Business faculty.
By Tom Stauder
Most taxpayers usually fall into one of two categories. On one hand are those who put off filing their tax return until the very last minute. These folks generally owe money, although many are actually due a refund, but would prefer not to think about 1040s and W-2s. For those of you in that frame of mind, April 15 this year falls on a Friday, but the government has generously allowed us to ruin one more weekend by making the due date Monday, April 18.
The other type of taxpayer is the one who knows a refund is coming. Their main concern is, “what’s the soonest I can file?” Last year, the IRS didn’t start accepting electronically filed returns until February 15. This year, they seem to be a little more organized, because they already opened up e-filing a week ago. By the way, one sure way to delay your refund is to mail your return, and/or ask for a paper check instead of direct deposit into your bank account.
Do you have kids? Then you probably have been receiving checks on the 15th of every month, since July, in the amount of $300 per child aged five and under, and $250 per child 17 and under. That would add up to exactly half of your allowed child tax credit of $3,600 per youngster, and $3,000 for each older child. You will claim the remaining half of the credit when you file your 2021 return. If you did not receive those amounts, you can claim them on your return. The IRS has started mailing out what they are calling Letter 6419, which tells you the amount you received. If you are married, each spouse will receive their own Letter 6419. You’ll need these letters to prepare your tax return. It’s a good idea to check your bank account and verify that you did indeed receive the amounts indicated in the letter.
It’s possible you received more than you were due (for example, if you had a child reach their 18th birthday during the year). Will you have to pay back the extra? Yes, unless your 2021 income is below a certain level, about $60,000 for married couples. The details are in your Letter 6419.
You may also have noticed that the monthly checks did not arrive in January. That’s because the large Child Tax Credit, and the advance payment of them, expired in 2021. For 2022, the credit goes back to its old amount: $2,000 per child 17 and under and $500 for dependents over 17.
Another item your tax preparer (or tax software) will ask for this year is if you received your third stimulus payment of $1,400 per eligible person in your household. These were sent out in March and April of 2021. Again, if you did not receive them, you can claim them on this return. Other notes:
- Charitable contributions: In 2018, when the standard deduction was doubled, most people stopped itemizing deductions, which means they were no longer deducting gifts to charity. For 2021, you can again deduct up to $300 ($600 for married couples), even if you do not file a Schedule A for itemized deductions. Note: This is for cash-only donations, not the old sofa you gave to Goodwill.
- Education: If you have a dependent in college, we lost one helping hand this year. The $4,000 Tuition and Fees Deduction has expired. The good news is that the American Opportunity Tax Credit and the Lifetime Learning Credit for education expenses are still in effect.
- One final note: Any and all of the above can still change for 2022. Biden & Co. are still pushing for the expanded Child Tax Credit to be extended. As of this writing, most Democrats are on board, but it has no Republican support. We shall see which way the wind blows.
Tom Stauder, CPA is an accounting professor at Columbia College.