Theresa Arndt, CPA

Each calendar year provides unique challenges and updates to tax law impacting businesses and individuals. This post will highlight some of the major changes for individuals. If you wish to see tax law changes affecting businesses, you can go here. Article Highlights Economic Impact Payments – Third Round Educator Expenses Charitable Contributions for Non-Itemizers Charitable Contributions for Itemizers Child Tax Credit Child & Dependent Care Credit Earned Income Tax Credit Premium Tax Credit Education Credits Dependent Care Assistance Plans Cryptocurrency Reporting Student Loan Discharge Student Loan Relief New Above-the-Line Deductions Pell Grants Unemployment Benefits Net Investment Income Tax Surcharge on High-Income Taxpayers Required Minimum Distributions (RMDs) and COVID Distributions The Home Office Deduction IRS Processing Challenges On December 27, 2...

Many of you are already gathering your 2021 tax documents in hopes of filing as quickly as possible in anticipation of a refund. But be patient. I know you've heard that before. But it's true again this year. So before you file, let’s review the tax documents we need to properly file your 2021 tax return. New Tax Documents for 2021 The IRS identifies two new documents as Letters 6419 and 6475 .   Both are issued in connection with some COVID-19 relief created by the American Rescue Plan Act (ARPA) that became law last March 2021. Letter 6419 This letter is on the way to families who got half of the enhanced Child Tax Credit (CTC) amount last year.  The credit for qualifying dependents for the 2021 tax years was increased to $3,600 for younger children and $3,000 for older children, also as part of the ARPA. In addition, that new law instructed the IRS to send eligible families  half of the credit amounts early as monthly payments  from July through Decembe...

  If you have a child 17 years old or younger, you may soon be seeing a payment from the IRS ! In fact, you may be seeing a payment from the IRS every 15 th of the month from July through December 2021. These are not more of your typical economic impact payments (aka “stimulus checks”). They are actually advanced payments of the Child Tax Credit…a credit you usually receive when you file your tax return.   WHAT EXACTLY ARE THESE PAYMENTS, AND HOW MUCH WILL THEY BE? The “advance Child Tax Credit payments” are early payments of the Child Tax Credit you usually would have on your tax return. The payments will be paid once per month from July 15 th – December 15 th and will equal ½ of the estimated total you would receive on your 2021 tax return for that credit. For 2021 only, the Child Tax Credit has been increased to $3,600 for each qualifying child 5 years old or younger , and $3,000 for each qualifying child between 6 years old to 17 years old . (For reference, f...