Recently, the IRS released an article talking about the 2022 tax season. In this article they covered several different topics which we will touch on a few here.
First off, they have stated they are still processing 2020 returns. The article discusses several different reasons why they are still working on 2020 returns. They are making adjustments for individuals who had unemployment compensation so they will not have to file an amended return. The IRS stated they are correcting more errors on the 2020 returns than they have in previous years. More than 10 million electronically filed returns contained errors requiring a manual review of the information submitted. During 2021 they had 168 million tax returns for 2020, and as of December 4, 2021 they had about 6.7 million individual returns and 2.6 million Forms 1040-X still unprocessed. They are processing the returns in the order received. They are using the lessons learned from the last filing season to be better prepared for the current season.
The article also included a section of “What’s new and what to consider when filing in 2022”.
- File a 2021 return even if you don’t have to. There might be some tax credits you qualify for that are only available if you file a return.
- Electronic filing with direct deposit is the fastest way to receive your refund. Filing a paper return could cause delays in processing. If you file electronically and there are no issues with your return the IRS anticipates you will receive your refund within 21 days if you choose direct deposit.
- Make sure to reconcile your advance child tax credit payments. If you received advance payments you will need to file a 2021 tax return. The advance payments will decrease the amount of the credit you are able to claim on your return. Individuals who received the advance payments should have received letter 6419 by now.
- You are able to claim a recovery rebate credit (aka stimulus payment) if you did not receive the third payment during the first half of 2021, or if you did not receive the amount you should have received. The third payment was based off of the latest return the IRS had on file. If you did not qualify at that time but now you do based off of your 2021 income you will be able to claim the credit.
- If your 2020 return is still being processed when filing your 2021 return and you are asked for your Adjusted Gross Income (AGI) from the previous year you will need to use $0.
- Unemployment compensation is taxable. Last year there were some tax breaks for qualifying individuals who received unemployment, but for 2021 the full amount is taxable.
We understand that tax time can be a stressful time with all the changes; should you have any questions please do not hesitate to contact one of our trusted tax advisors.
