TAMPA, Fla. – As Tax Day approaches, Americans who experienced certain life events in 2021 may be surprised by how some tax changes are impacting their bottom line.
Many people ended 2021 in a far different place than they began. As the tax filing deadline approaches, that new job, new house, new baby, or new hobby could mean extra time spent gathering your information and understanding provisions that may not have applied to you before.
Last year was a great year in the tech, in the stock market. I mean, I think you could have thrown a dart last year and done really well,” said Steve Osiason, certified public accountant.
Trading by individual investors surged in 2021, and anyone who made money during that boom could have a larger than usual tax bill.
“You have a choice how you elect your mutual funds. You can get the money or you can have it reinvested. No matter which way you do it, you still are paying taxes,” Osiason explained.
Checks for up to $1,400 per person were sent out last March, a third stimulus check as the pandemic lingered on. However, not everyone eligible got the payment, or the amount folks should have received. That can be fixed with the recovery rebate credit.
“The IRS is mailing out one-page letters that say you received an economic stimulus payment of $1,400,” Osiason stated. “Because if you didn’t get it, you can get it on this year’s tax return.”
Anyone with kids under 18 will have to navigate the child tax credit. There were big changes in 2021, the amount was increased, and the federal government distributed payments to most people in advance.
“So on the tax return, you can put down how much you’re supposed to have gotten and how much advance did you already get, and then you get the difference,” Osiason said.
Temporary changes were also made to the child and dependent care tax credit. To qualify you must be a single parent, or both parents must be working. The credit is worth more than in past years, and it is fully refundable for 2021.
“It used to be, there is no limit on income, no matter how much you did get it, but this is limited. So some higher-income people are phased out of getting the child care credit,” Osiason said.
Tax Day is Monday, April 18.