2021 Tax Return Filings: Time to Start Planning
2021 Tax Return Filings: Time to Start Planning
The tax year is almost over – and you will soon need to prepare your 2021 tax returns. Right now is the right time to start thinking about what you will need to file those 2021 tax returns.
Here are some suggestions, including notice of new IRS Letter 6475 and Letter 6419, that may make the process smoother:
If you received Economic Impact Payments this year:
- Amounts were up to $1,400 per qualifying individual
- Sent out beginning in July 2021
- Look for Letter 6475 from the IRS summarizing amounts received and confirm with your records
- If advance payments were not received, you may be able to claim and request a refund on your 2021 tax return
If you received Advance Child Tax Credit Payments* this year:
- Amounts varied and could be up to $300 per qualifying child
- Sent out beginning in July 2021
- Look for Letter 6419 from IRS summarizing amounts received and confirm with your records
- Advanced payments will reduce the credit that can be claimed on your 2021 tax return
*The IRS suggests creating an account to manage records for these payments at www.IRS.gov.
If you expect to receive Form W-2 for wages earned or Forms 1099 for non-employee compensation or investment income:
- Most of these tax documents will be sent to you or available to download in early February
If you made charitable contributions this year:
- Certain cash and non-cash contributions can be deducted if you can claim itemized deductions
- Certain cash contributions up to $300 (or $600 for married couples filing jointly) can be deducted for non-itemizers
- Receipts and records should be maintained to support the deduction. See our prior blog article Charitable Contribution Deductions.
If you made retirement plan contributions this year:
- You should receive documentation from the retirement plan administrator with the amounts contributed
- Depending upon your situation some contributions may be deductible
- Certain taxpayers may receive a credit for contributions to retirement plans
If you made estimated tax payments this year:
- Summarize amounts and dates paid for all income tax estimated payments:
- Federal
- State
- Local
If you made gifts to during this year:
- For gifts, including cash, greater than $15,000 per recipient provide:
- Recipient name
- Recipient address
- Recipient relationship to donor (if any)
- Description
- If publicly traded securities, CUSIP number
- If closely held entity stock, EIN
If you had other potential tax-deductible expenses this year:
- The following expenses may be eligible for tax deductions or tax credits:
- Education expenses – Keep records of amounts paid, dates and the educational organization receiving the payments
- Medical expenses – Keep records of the amounts paid, dates paid and nature of the expense
- Home mortgage interest – You should receive Form 1098 in early February
- State and local taxes – Includes income taxes and property taxes. Income taxes withheld will be reported on Forms W-2. Keep records of estimated tax payments (see 6 above) and amounts and dates of property tax payments. NOTE under current tax law the combined deduction for state and local taxes is limited to $10,000.
Final thoughts
The above suggestions will help you gather the information necessary to prepare your 2021 tax return.
Please contact your Herbein tax return preparer if you have questions regarding the suggestions in this article or any other tax return preparation questions.
Article prepared by Barry Groebel and Elizabeth Hassler. For additional information contact us at info@herbein.com.