Tax Time Guide: Important considerations before filing a 2021 tax return
WASHINGTON — Now that the 2022 tax season is open, the Internal Revenue Service reminds taxpayers to make sure they’ve got what they need before they file and to consider free resources available to help them get organized.
This news release is part of a series called the Tax Time Guide, a resource to help taxpayers file an accurate tax return. Additional help is available at IRS.gov or in Publication 17, Your Federal Income Tax.
Don’t file before ready
While taxpayers should not file late, they also should not file prematurely. People who file before they receive all the proper tax reporting documents risk making a mistake that may lead to processing delays.
Typically, year-end forms start arriving by mail – or are available online – in January. Taxpayers should review them carefully. If any of the information shown is inaccurate or not available, taxpayers should contact the payer right away for a correction or to ensure they have their current mailing or email address.
New this year, the IRS sent Letter 6419, Advance Child Tax Credit Reconciliation, in January 2022 to help individuals reconcile and receive the full amount of their 2021 Child Tax Credit. This letter includes the total amount of the 2021 advance Child Tax Credit payments issued and the number of qualifying children used to calculate their advance payments. People need this important information to accurately claim the other half of the 2021 Child Tax Credit when filing their 2021 tax return and prevent delays in processing. The IRS reminds people to check this information carefully.
Most eligible people were already issued their third Economic Impact Payment and won’t include any information about it when they file. However, people who didn’t qualify for a third payment or did not receive the full amount may be eligible for the 2021 Recovery Rebate Credit based on their 2021 tax situation. They will need the total amount of their third Economic Impact Payment to file an accurate tax return to avoid a processing delay. Taxpayers can sign into their IRS Online Account to view the total amount of the third-round Economic Impact Payment or wait to receive IRS Letter 6475.
Individuals not required to file must file a tax return to claim important tax credits
The IRS strongly encourages individuals who are not required to file a tax return to file one this season to claim potentially thousands of dollars in tax credits. By filing a tax return, individuals could claim:
- The Recovery Rebate Credit to receive any remaining 2021 stimulus payments that they might not have received (for example, if they added a new child or other dependent in 2021);
- The remaining Child Tax Credit for which they are eligible, including any monthly payments that they might not have received (for example, if they added a new qualifying child in 2021); and
- The Earned Income Tax Credit, the federal government’s largest refundable tax credit for low- to moderate-income families (the amount of which has been nearly tripled for filers without children).
View IRS account information online
Individuals can use their IRS Online Account to securely access information about their federal tax account, including payments, tax records and more.
To help with filing a return, individuals can view:
- The total amounts of Economic Impact Payments issued for tax year 2021
- The total amount of advance Child Tax Credit payments
- Their adjusted gross income from their last tax return
- The total of any estimated tax payments they made, and refunds applied as a credit
They can also now make and track payments and manage communication preferences, including the option to go paperless and request email notifications for certain notices available online. Taxpayers are encouraged to register for an online account, if they haven’t already, or sign in to access this information and explore these new features.
Important 2021 Tax Documents
Organized tax records make preparing a complete and accurate tax return easier and may help taxpayers find overlooked deductions or credits.
Taxpayers should wait to file until they have all their supporting income statements including but not limited to:
- Forms W-2 from employer(s)
- Forms 1099 from banks, issuing agencies and other payers including unemployment compensation, dividends and distributions from a pension, annuity or retirement plan
- Form 1099-K, 1099-Misc, W-2 or other income statement if they worked in the gig economy
- Form 1099-INT if they received interest payments
- Other income documents and records reporting virtual or crypto currency transactions
- Form 1095-A, Health Insurance Marketplace Statement, to reconcile advance Premium Tax Credits for Marketplace coverage
- Letter 6419, 2021 Total advance Child Tax Credit Payments to reconcile advance Child Tax Credit payments
- Letter 6475, 2021 Economic Impact Payment, to determine eligibility to claim the Recovery Rebate Credit.
Once taxpayers have collected all their tax documents and information, they’re ready to consider how they will file.
IRS Free File is a great option for eligible taxpayers who are only filing a tax return to reconcile 2021 advance payments and claim the remaining portion of their Child Tax Credit or to claim the 2021 Recovery Rebate Credit, either because they didn’t receive a third-round Economic Impact Payment or did not receive the full amount. IRS Free File can also be used to claim the Earned Income Tax Credit, which provides a refundable tax credit based on a filer’s income and family size.
IRS Free File is available to any person or family who earned $73,000 or less in 2021. This year, there are eight IRS Free File products in English and one in Spanish.
Taxpayers can use a “look up” tool to choose from one of the Free File Providers. Each provider sets its own eligibility standards, generally based on income, age and state residency giving taxpayers who earned $73,000 or less at least one product to use for free.
Free File is just one way the IRS provides free tax preparation options to taxpayers through a partnership model. The IRS also partners with community organizations to train IRS-certified volunteers to prepare and electronically file basic income tax returns for qualified individuals for free.
Qualified taxpayers who generally make $58,000 or less, persons with disabilities and limited English-speaking taxpayers who need help preparing their own tax returns can get free tax help at one of thousands of community volunteer sites through the Volunteer Income Tax Assistance (VITA) program.
And the Tax Counseling for the Elderly (TCE) program offered by AARP, offers free tax help for all taxpayers, particularly those who are 60 and older, specializing in questions about pensions and retirement-related issues unique to seniors.
Members of the military and qualifying veterans can use MilTax, a Department of Defense program that generally offers free online tax preparation and e-filing software for federal returns and up to three state returns.
New alternative media preference to help taxpayers
Beginning Jan.31, 2022, taxpayers can complete Form 9000, Alternative Media Preference, to choose to receive their IRS tax notices in Braille, large print, audio or electronic formats. This includes notices about additional taxes or penalties owed. Taxpayers can include the completed form with their tax return, mail it as a standalone form to the IRS or call 800-829-1040 to elect their preferred format.
As a reminder, Forms 1040 and 1040-SR are available in Spanish, and Schedule LEP, Request for Change in Language Preference, allows taxpayers to request information in 20 different languages besides English.
E-file and choose direct deposit
The IRS encourages taxpayers to file electronically and use direct deposit to get their refunds. Combining e-file with direct deposit is the safest and fastest way to receive a refund. Taxpayers can file electronically through a tax professional, IRS Free File or commercial tax preparation software. When choosing e-file and direct deposit, most people receive their refunds in less than 21 days.
People who don’t have a bank account can visit the FDIC website or use the National Credit Union Administration’s Credit Union Locator Tool to find an institution that allows them to open an account online and for tips on how to choose the right account. Veterans can check out the Veterans Benefits Banking Program for access to financial services at participating banks. Taxpayers can also ask their preparer if they offer other electronic refund options.
Although most refunds are delivered in 21 days, it could take longer if the tax return includes errors, is incomplete or requires further security review. Paper-filed tax returns and paper refund checks will take even longer this year.