Financial Education Blog

Important changes to know about the 2022 tax season

The 2022 tax season is underway, and although this year’s deadline – April 18 – is still a while off, you don’t want to delay. If you haven’t yet filed, there are a few topics you’ll want to familiarize yourself.

 

Child Tax Credit Payments

In an effort to assist struggling families with financial difficulties brought on by the pandemic, the Internal Revenue Service (IRS) sent an advance on the child tax credit as monthly payments to qualifying families. This effort was a part of the American Rescue Plan signed into law in March 2021 by President Joe Biden. Qualifying families began receiving up to 50% of their child tax credit from July to December 2021. Depending on your income, you could have received up to $3,600 for children under the age of six and up to $3,000 for children between the ages of six to 17. 

 

If you chose to receive the monthly child tax credit payments (which were based on your 2019 or 2020 tax return), you’ll need to report those funds in your 2021 taxes. Since the advance on the child tax credit was limited to 50%, some families can claim the remainder of the full tax credit on their tax returns for 2021. But if you chose to opt-out of the advance monthly payments, you’ll be able to claim the full child tax credit in your 2021 tax return. 

 

Depending on the amount you received, your tax refund could look bigger or smaller and you could even end up owing money. In June 2021, the IRS mailed out Advance Child Tax Credit Outreach letters. These letters gave taxpayers an estimate of their tax credit for 2021. Be sure to refer to these letters when completing your taxes to ensure you’re claiming the correct amount.

 

Third Stimulus Payments and the Recovery Rebate Tax Credit

The final round of stimulus checks went out in 2021. If you did not receive the third stimulus or received a partial payment, you could be eligible for the Recovery Rebate Credit.  In order to claim any missing payments, you’ll need to file a 2021 tax return. If you are unsure, you can log on to your online account at IRS.gov to see your third stimulus amount. 

 

 Charitable Donations

Rules have changed slightly when it comes to itemizing deductions for contributions made to qualifying organizations. Individuals who don’t itemize deductions may be eligible for a deduction of up to $600 for married couples filing jointly and up to $300 for all other individuals  for cash contributions made in 2021. If you do happen to claim your donations as itemized deductions, you can claim up to 100% of your adjusted gross income for your cash donations made to qualifying organizations but only for 2021. Normally, you’re allowed to deduct up to 60% of your adjusted gross income. 

 

Getting your taxes done

If you’re planning on tackling your taxes yourself, 7 17 Credit Union members can save when using TurboTax paid products and even file for FREE with their free edition. To learn more and to take advantage of this offer, login to NetWorth24 Online Banking.