Child tax credit and stimulus checks impact 2022 tax refunds

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Time is running out to file your taxes.

Tax season is in its final weeks with the Internal Revenue Service deadline of April 18 for most states. It’s the first deadline since 2019 after extensions over the past two years amid the pandemic.

The IRS has begun accepting and processing2021 tax returns January 24, 17 days earlier than the late start of the last fiscal season on February 12.

(If you have tax questions, feel free to fill out this form, which is also found below. USA TODAY will answer readers’ top questions during the 2022 tax season.)

This tax season, there are key differences in how unemployment benefits will be handled compared to 2020 filings. You will also need to consider child tax credit advance payments, recovery rebate credit repayment and a special break for charitable contributions, among others.

As you begin to prepare your returns, here are a few things to keep in mind:

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How has COVID relief changed tax rules?

The pandemic relief has changed many rules for 2021 tax filings. In 2021 filings, there is no longer an age limit or cap set at 64 or younger for workers qualify for the earned income tax credit. It’s a one-time deal, but AARP is pushing to extend the tax relief for older workers beyond 2021 tax filings.

Earned Income Credit (also known as EITC or EIC) has been expanded so that the credit can apply on 2021 federal returns to workers age 65 or older, even if they don’t have dependent children, thanks to the US bailout package passed last year .

It now also applies to childless workers aged 19 to 24 who are not part-time or full-time students and who are declared dependents on their parents’ tax returns.

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What does the new cryptocurrency question mean on the 1040 tax form?

A question is now listed on the front of the Form 1040, just above the section to provide dependent information regarding cryptocurrency. The IRS asks, “At any time in 2021, did you receive, sell, trade, or otherwise dispose of a financial interest in virtual currency?”

Those who made a transaction involving virtual currency in 2021 must answer “yes” to a question on page 1 of Form 1040 or Form 1040-SR.

“Don’t leave this blank,” according to an IRS alert called “What’s New” in the instruction booklet for the current tax season.

“The question must be answered by all taxpayers, not just taxpayers who have engaged in a transaction involving virtual currency.”

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What’s the fastest way to get a refund?

The IRS advises filing taxes electronically and depositing the refund directly into a financial account. The IRS says refunds can be deposited directly into bank accounts, prepaid debit cards or mobile apps as long as a routing and account number is provided, the IRS said.

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When is the last day to file taxes in 2022? Has the tax deadline been extended?

The deadline for filing 2021 tax returns is Monday, April 18 for most people, three days later than the normal April 15 deadline for filing taxes.

The later date is the result of Emancipation Day in the District of Columbia. By law, in Washington, DC, holidays affect tax deadlines for everyone the same as federal holidays. Taxpayers who live in Maine or Massachusetts have until April 19 to file their return due to a holiday celebrated in those states, Patriots’ Day.

The IRS has extended the deadline to May 16 for victims of Colorado wildfires in late 2021 as well as victims of December tornadoes in parts of Illinois, Kentucky and Tennessee. The extension applies to various personal and corporate tax returns and tax payment deadlines.

What is the tax extension deadline?

April 18 is also the deadline to request an extension, giving taxpayers until October 17 to file their returns for 2021.

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Free tax return 2022: who can use the free IRS file?

If your adjusted gross income was $73,000 or less in 2021, you can use free tax software to electronically prepare and file your tax return, following the IRS online instructions for tax season. 2021.

Taxpayers who earned more can use the free fillable forms, the electronic version of federal tax forms, to file their tax returns online. Go to IRS.gov to learn more.

How long does it take to get a tax refund in 2022?

The IRS expects most taxpayers to receive refunds, as in previous years. Most should receive them within 21 days of e-depositing them if they choose direct deposit (and there are no issues with their returns). Last year’s average federal reimbursement was over $2,800.

The IRS advises that many different factors can affect the timing of a refund after the IRS receives a return electronically. A manual review may be required when a return contains errors, is incomplete, or is affected by identity theft or fraud.

This year's tax filing season started on January 24, 17 days earlier than in 2021.

Is this the best way to track tax refund with the IRS “Where’s my refund” tool?

Yes, the IRS says using “Where’s my refund?” at IRS.gov/refunds and the IRS2Go mobile app are the best ways to check the status of a refund. You can check the status within 24 hours of receiving your electronic return or four weeks after submitting a paper return.

Stimulus checks for 2022? Maybe through the recovery rebate credit.

Some people may want to file even though they are not required to do so to claim a recovery rebate credit or the 2021 stimulus payments.

According to the IRS, people who were not eligible for a third economic impact payment or who received less than the full amount may be eligible to claim the recovery rebate credit. For those who have received money, the IRS says you will need to know the total received to calculate the correct refund credit to avoid processing delays.

The IRS began sending letter 6475 in late January with the total amount of the third economic impact payment received. Economic impact payment amounts can also be viewed on IRS online accounts.

Child Tax Credit Payments: Look for IRS Letter 6419 Before Filing Your Taxes

In January, the IRS advised families to put tax filing on hold until they receive letter 6419 from the IRS, which can help them file an accurate return and avoid delays. However, some taxpayers have received letters containing incorrect amounts. Before filing your taxes, review your records and check their specific information on the IRS’ “Child Tax Credit Update Portal Site” at IRS.gov/ctcportal.

DO NOT DISCARD THIS IRS DOCUMENT:Why IRS letter 6419 is essential for filing your 2021 taxes and child tax credit.

TAX SEASON PROBLEM:The first glitch of tax season is here: This IRS child tax credit letter may be inaccurate

Will unemployment benefits come with tax relief in 2022?

Taxpayers got a startling tax break for unemployment benefits received in 2020 alone, as part of a $1.9 trillion stimulus package, which was signed into law in March 2021.

Under the U.S. bailout, many taxpayers were no longer required to pay taxes on up to $10,200 of unemployment benefits received in 2020. The exclusion was up to $10,200 of benefits unemployment for each spouse for married couples.

But this year, unemployment benefits received in 2021 will be taxable on the 2021 federal income tax return.

TAXABLE UNEMPLOYMENT INCOME:Don’t forget: unemployment benefits are taxable on 2021 tax returns

Contributor: Elisabeth Buchwald, USA TODAY; Susan Tompor, Detroit Free Press; Russ Wiles, Arizona Republic; Associated press

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