It is a big year for keeping up with the IRS!
The IRS kicked off the tax season yesterday January 24 when it first begin accepting and processing tax returns. The last few years have been riddled with changes and extensions, so what does this year hold?
Here are some of the major topics to be aware of.
Firstly, do not panic if you have not received all your documents or not ready to start filing. You still have time, however, not as much as the last couple years. The filing deadline is April 18, 2022 for the 2021 tax year.
The biggie this year is the advance Child Tax Credit and Letter 6419. Many parents have received an advance on the Child Tax Credit (aka the CTC). The advance is new and the IRS is sending Letter 6419 informing tax payers how much they received. If you have not received it, you are able to check how much your received on the IRS’ CTC portal (https://www.irs.gov/credits-deductions/child-tax-credit-update-portal). For divorced couples who alternate claiming kids, this can create some issues as the “wrong” parent may have received the advance CTC. This is because the IRS sent out these payments based on who was on the prior tax return. Please reach out to me if you need help with this.
There is another newbie this year related to the Economic Impact Payment (aka the Stimulus Payment) and Letter 6475. The $1,400 stimulus payment started going out in March 2021 and the IRS will send a letter (Letter 6475) informing you how much your family received. This may also create difficulties for those who alternate claiming children on the tax returns for the same reason as above. This can be a big one for those who are divorcing.
Healthcare Exchange and Form 1095-A is another one that has flip flopped the last couple years. Anyone who was on your Heathcare plan through the exchange (aka Obamacare) needs to be on your tax return. If they are not on the tax return, you may have to pay back any subsidies allocated to that individual. This can be a big one for those who are divorcing.
Unemployment is taxed fully this year. Last filing season, the government announced mid-season that the first $10,200 of unemployment per person would be exempt from taxes. This is not the case this year!
Of course the fun caveat to all this is that the government has changed things mid-season and may so again. As of opening day, the above is how everything stands. Please reach out should you have any questions or need help with your taxes.
Hirsch Serman, MBA, CPA is the founder of Lifecycle Financial LLC, a company that helps those going through Divorce and other life cycle transitions to navigate the financial pitfalls of a new life dynamic. The company was founded through personal experiences in divorce and watching the changes in an aging parent. He has worked in finance for over 20 years (including financial planning and tax) and has taught on the university level as well as conducted seminars for high school youth on personal finances. Hirsch is a member of the National Association of Divorce Professions (The NADP), The AICPA, Continuity of Care, and the American Association of Daily Money Managers (AADMM).
Listen to Hirsch’s radio show The Financial Wellness Hour
INC., US News & World Report, DivorcedMoms.com, DivorceMag.com, Better, The Memphis Business Journal, The Financially Independent Millennial, and Funding Sage media outlets have all covered his work in Divorce. Hirsch has a passion to serve others and has s numerous non-profit boards including the United Way and is a Trustee on the Board of Texas College. Please reach out with any comments to firstname.lastname@example.org.