CALIFORNIA — The 2022 tax season is upon us — and as W-2s and other tax forms hit U.S. mailboxes, many in California will be wondering when they can file and what changes are in store for their returns this year.
The first day to file 2021 tax returns is Jan. 24, according to the Internal Revenue Service. That’s two weeks earlier than last year.
As the Internal Revenue Service battles with staffing shortages, backlogs and aging technology, watchdog groups are encouraging taxpayers to file their 2021 returns as far ahead of the Monday, April 18, tax deadline as possible. They should also file electronically.
This is the second year Americans will file tax returns that will likely look significantly different than in previous years due to the ongoing coronavirus pandemic. One of the largest changes that could affect returns this tax season is the expanded child tax credit payments received by a vast majority of Americans.
Before you file, here’s everything you should keep in mind about the 2022 income tax season:
How will advance child tax credit payments affect my return?
Over the last six months of 2021, millions of families received monthly payments based on how many children were in their households as well as their ages. These first-ever advance child tax credit payments could affect your tax return in different ways, according to a report by Forbes.
First, filers will be required to report how much they received in payments. Depending on the amount of child tax credit payments received in 2021, filers may receive a bigger or smaller tax refund than expected. They may even owe additional taxes.
To figure out whether you owe additional taxes, the IRS will send out Letter 6419, which will state the total amount of child tax credit payments you received. You should compare this amount with the total child tax credit to which you’re entitled.
If the total child tax credit for which you’re eligible exceeds how much you received, you can claim the remaining amount on your 2021 tax return. If you received more than you qualify for, you will need to repay some or all of the excess payments when filing taxes.
The IRS has more answers to questions about advance child tax credit payments on its website.
What about the COVID-19 stimulus payment I got this year?
If you received a stimulus payment between March and December 2021, you will receive Letter 6475 from the IRS in early 2022, which shows the amount of your third stimulus payment. Do not throw this letter away. You will need it to claim the payment on your taxes.
Letter 6475 will also help determine whether you are eligible for the Recovery Rebate Tax Credit.
The Recovery Rebate Tax Credit worksheet will be used to request any additional payments you may be owed through your 2021 tax return. This is especially important if you didn’t receive a stimulus payment or only received a partial payment.
If you’re eligible for the Recovery Rebate Tax Credit but usually don’t file a tax return, you will need to file this one to receive any owed funds.
Here’s more on this year’s economic impact payments and the Recovery Rebate Tax Credit.
What if I received unemployment benefits this year?
Unemployment was down significantly last year. Still, 25 million Americans filed for unemployment benefits in 2021, CNBC reported.
The American Rescue Plan Act passed in March waived federal tax on up to $10,200 of unemployment benefits, per person, collected in 2020; however, Congress hasn’t passed a law offering a similar tax break on 2021 benefits.
This means if you collected unemployment benefits in 2021 and didn’t withhold federal tax from benefit payments — or withheld too little — you may owe money this tax season.
If I donated to charity, do I have to itemize deductions?
Not necessarily. If you plan to claim the standard deduction on your 2021 tax returns, you can write off up to $600 in contributions to charities.
In 2020, a charitable-giving deduction of $300 was authorized under the CARES — Coronavirus Aid, Relief and Economic Security — Act. This year, however, the charitable deduction is more for those who file a joint return.
For 2020, the charitable limit was per “tax unit” — meaning that those who are married and filing jointly could only get a $300 deduction. For the 2021 tax year, those who are married and filing jointly can each take a $300 deduction for a total of $600.
Under the change, individual taxpayers can claim an “above-the-line” deduction of up to $600 in cash donations to qualifying charities in 2021. This means the deduction lowers both gross income and taxable income — translating into tax savings for those making donations to the qualifying tax-exempt organization.
Have any California tax laws changed this year?
California has experienced some changes to its tax laws. Marijuana cultivation taxes rose this year to adjust for inflation. Flowers are also now taxed at $10.08 per dry-weight ounce, and leaves are taxed at $3 per dry-weight ounce. Fresh marijuana plants are also now taxed at $1.41 per ounce.
Before the New Year, the taxes on flowers were $9.65 per dry-weight ounce, leaves at $2.87 per dry-weight ounce and marijuana plants at $1.35 per ounce.
Do I qualify for earned income tax credit?
The earned income tax credit exists to help middle- to low-income individuals and families reduce the amount of taxes they pay and can help them get more in refunds, according to the IRS.
The IRS has an online tool to see if you qualify for the credit.
What is the standard deduction for 2022?
The standard deduction is a dollar amount that reduces the amount of income on which you are taxed and varies according to your filing status.
The standard deduction for each filing status for the 2022 tax year has changed slightly from 2021, according to the IRS:
Single or married filing separately: $12,950, up $400 from 2021.
Married filing jointly or qualifying widow: $25,900, up $800 from 2021.
Head of household: $19,400, up $600 from 2021.
Other federal changes for the 2022 tax year are listed here.
What are the tax brackets and thresholds for single filers this year?
10 percent — $0 to $9,950
12 percent — $9,951 to $40,525
22 percent — $40,526 to $86,375
24 percent — $86,376 to $164,925
32 percent — $209,426 to $523,600
35 percent — $416,701 to $418,400
37 percent — $523,601 or more
When is Tax Day this year?
For most taxpayers, the deadline to submit 2021 tax returns or to file an extension to pay taxes owed is Monday, April 18. Taxpayers in Maine or Massachusetts have until April 19 to file their returns. Taxpayers requesting an extension will have until Oct. 17 to file.