Month: February 2022

Tips to Receive Your Tax Refund Faster

The deadline for filing your tax return is April 18 for most people this year (due to the Emancipation Day holiday in Washington, DC falling on April 15), but if you are expecting a refund this year, you will probably want to file long before that deadline so that you can receive your tax refund sooner rather than later.

In addition to filing early, there are a number of other things you can do to ensure that you receive your tax refund as quickly as possible.

  • Fastest refunds by e-filing, avoiding paper returns: Filing electronically with direct deposit and avoiding a paper tax return is more important than ever this year to avoid refund delays. If you need a tax refund quickly, do not file on paper – file electronically through a trusted tax professional.
  • Special care for EIP, advance Child Tax Credit recipients: If you received a third Economic Impact Payment or advance Child Tax Credit in 2021, you should have received a letter from the IRS documenting the stimulus payments and advance Child Tax Credits that you received. Be sure to provide these letters to your tax preparer so that they can be entered correctly on your tax return. If these payments are reported incorrectly on your return, the IRS will need to further review the tax return, creating an extensive delay.
  • Earned Income Tax Credit or Additional Child Tax Credit refunds: By law, the IRS cannot issue a refund involving the Earned Income Tax Credit or Additional Child Tax Credit before mid-February, though eligible people may file their returns earlier. The law provides this additional time to help the IRS stop fraudulent refunds from being issued.
  • Don’t normally file a return? Consider filing for CTC, and other valuable credits: If you don’t normally file a tax return and didn’t file a 2020 return or use the IRS Non-Filers tool, you can still qualify for important credits that you’re eligible for, including the Recovery Rebate Credit (stimulus payment), advance Child Tax Credit (CTC) or the Earned Income Tax Credit (EITC). If you fall in this group, be sure to file a 2021 tax return so you can receive all the credits for which you’re eligible.

If you need help getting your refund as quickly as possible, please call our office so we can schedule an appointment.

Economic Impact Payments and Families with New Dependents

The Internal Revenue Service announced on January 26 that all third-round Economic Impact Payments have been issued. While some payments of the Economic Impact Payments from 2021 may still be in the mail, the IRS is no longer issuing new payments.

Families with new dependents in 2021

The third-round Economic Impact Payment was an advance payment of the tax year 2021 Recovery Rebate Credit. The amount you received as a third-round Economic Impact Payment was based on your income and number of dependents as listed on your 2019 or 2020 income tax return, but the amount of the 2021 Recovery Rebate Credit you are due is based on your income and number of dependents as listed on your 2021 income tax return. As a result, you may not have received the full amount you are due if your circumstances changed between 2020 and 2021.

If you or your family fit into any of the categories below, you may be eligible to receive more money by claiming the 2021 Recovery Rebate Credit on you 2021 income tax return:

  • Parents of a child born in 2021 who claim the child as a dependent on their 2021 income tax return may be eligible to receive a 2021 Recovery Rebate Credit of up to $1,400 for this child. (All eligible parents of qualifying children born or welcomed through adoption or foster care in 2021 are also encouraged to claim the child tax credit — worth up to $3,600 per child born in 2021 — on their 2021 income tax return.)
  • Families who added a dependent – such as a parent, a nephew or niece, or a grandchild – on their 2021 income tax return who was not listed as a dependent on their 2020 income tax return may be eligible to receive a 2021 Recovery Rebate Credit of up to $1,400 for this dependent.
  • Reduced income.
    • Single filers who had incomes above $80,000 in 2020 but less than this amount in 2021; married couples who filed a joint return and had incomes above $160,000 in 2020 but less than this amount in 2021; and head of household filers who had incomes above $120,000 in 2020 but less than this amount in 2021 may be eligible for a 2021 Recovery Rebate Credit of up to $1,400 per person.
    • Single filers who had incomes between $75,000 and $80,000 in 2020 but had lower incomes in 2021; married couples who filed a joint return and had incomes between $150,000 and $160,000 in 2020 but had lower incomes in 2021; and head of household filers who had incomes between $112,500 and $120,000 in 2020 but had lower incomes in 2021 may be eligible for a 2021 Recovery Rebate Credit.

If you are entitled to eligible to receive more money by claiming the 2021 Recovery Rebate Credit, you must claim it on your 2021 income tax return in order to receive it; the IRS will not automatically calculate the 2021 Recovery Rebate Credit. The IRS began accepting 2021 income tax returns on January 24.

Most other eligible people already received the full amount of their credit in advance and don’t need to include any information about this payment when they file their 2021 tax return. The IRS issued additional payments – called “Plus-Up” Payments – to people who initially received a third-round Economic Impact Payment based on information on their 2019 tax return and were eligible for a larger amount based on information on their 2020 tax return.

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