Multiple tax law changes in 2021 will impact the majority of Americans in the upcoming tax season says William D King. The extended child tax credit payments can impact several families and their tax refunds. Also, for 90% of Americans who are claiming the usual deduction, they will witness a minor but positive change. However, the IRS is yet to declare the official start date for the 2022 tax season. It generally starts accepting the tax returns towards the end of January.
William D King highlights the things to know about the tax changes
- The monthly payments for the child tax credit can decrease or increase the refund
It’s the first time in history that the IRS had sent child tax credit as its monthly payment to families that qualified for it. Based on the amount for the monthly child tax credit payments obtained in 2021, you can get a higher tax refund, get a reduced refund as anticipated or even get indebted to extra taxes. In case you got monthly payments for child tax credit payments, you should report the amount on the 2021 tax return. You must get the Letter 6419, that will declare the overall payment for the child tax credit that you got. According to the IRS you need to compare the amount with the overall child tax credit you are supposed to get.
William D King says that if the overall child tax credit that you get qualified for surpasses what you got through the advanced payments for child tax credit, you can claim the leftover amount on the 2021 tax return. If you got more than you got qualified for, it’s essential to repay all or some of the extra payment back to the IRS when you are filing the tax.
2021 recovery rebate for the tax credit for the third stimulus payments
For the year 2021, you might get qualified for Recovery Rebate Tax Credit.It is true if you didn’t get the payment for the third economic payment or got only a fraction of the payment. However, it is essential to file the 2021 tax return, even though you might not need to do it.
You don’t need to itemize for claiming charitable donations
Usually, it would help if you itemized to subtract the charitable contributions. However, for 2021, you can deduct to $300 for the cash donations for qualifying charities, whether you itemize or obtain for the standard substruction in 2021. The charitable donation deduction that got increased for both individuals who itemized. And who didn’t in 2021 is an eventful year for supporting the choicest charity.
Also, there is an advantage for generous charitable givers who did itemize. The ones who claim charitable contributions as the itemized deductions. Are able to claim the cash contributions made to the organizations. That qualified for about 100% of the adjusted gross income for tax in 2021. Usually, the deduction gets restrict to about 60% of the taxpayer’s AGI.
According to William D King, it is essential. To keep in mind that transient increase in the 100% limit hasn’t been automatic. It is essential for the taxpayers to opt-in for higher limitations. By enabling the election on the federal tax return for the year 2021. Else, the standard limitation of 60% is applicable.