Tax season is upon us, which means it’s time to start thinking about your 2021 federal tax return. As you gather documents and prepare, here are some tips to keep in mind to help the process go a little more smoothly.
(1) Keep IRS Letters
Taxpayers who received advance child tax credit (CTC) payments or the third round of Economic Impact Payments will receive letters from the IRS. The CTC letters started going out in December 2021 and will continue through January. The “stimulus check” letters will be sent toward the end of January.
If you receive one (or both) of these letters, do not throw them away. They contain important information for your 2021 federal tax return. Save the letters and send them to your BSB tax advisor for tax filing.
The CTC letter includes the total amount of child tax credit payments received in 2021 and can be used to determine the amount of the child tax credit that can be claimed on the 2021 tax return. Taxpayers who received advanced payments can also use the CTC Update Portal on IRS.gov to check payment amounts.
The economic impact payment letter applies to the third round of payments that were distributed between March through December of 2021. The letter can help taxpayers claim the 2021 recovery rebate credit, if eligible.
(2) Expect Delays
The IRS is still experiencing a backlog from 2019 and 2020, so be prepared for delays processing 2021 tax returns. Filing, paying and requesting refunds electronically is recommended for quicker processing.
(3) Prepare and submit documents as soon as possible
Tax filing season opens on January 24. The sooner you gather and provide necessary tax information, the more efficiently the process will go. Submit documents as soon as you have them so we can start on your tax return as soon as possible.