What to Expect When Filing Your Tax Return in 2022

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By Janet Berry-Johnson, CPA
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Tax season is here, and while you might still be gathering your W-2s, 1099s and other tax documents, the IRS started officially accepting returns on January 24, 2022.

Assuming you weren’t first in line to file on that date, what can you expect when filing your tax return in 2022?

Fortunately, there aren’t many major changes in the tax laws this year.

Still, there are a few updates and changes that could impact your 2021 return. Here’s a quick rundown.

Recovery Rebate Credit

The third round of stimulus checks, also known as economic impact payments (EIPS), were sent in March through December of last year. The EIPs were worth up to $1,400 per person, and they were actually an advance of a tax credit you may be eligible to claim on your 2021 tax return.[1]

If you received Letter 6475 from the IRS, this letter provides details about the third stimulus payment.[2] Hold onto this document to prep for your taxes this year.

Advanced Child Tax Credit Payments

In 2021, the The Child Tax Credit was expanded to provide up to $3,600 for each dependent child aged five and younger and up to $3,000 for each child between ages six and 17 of eligible families.[3] The monthly payments delivered half of that amount to parents in equal monthly installments unless they opted out of advanced payments.[4]

If you’re one of the many people who received advanced child tax credit payments in 2021, expect to receive Letter 6419 from the IRS.[5] This is another document to look out for as it will be helpful to have during tax season.[6]

Inflation Adjustments

Each year, the IRS updates tax brackets, standard deduction amounts, and other tax code elements to reflect changes in the cost of living due to inflation, which is the increase in the prices of goods and services over time.[7]

Some of those inflation adjustments include:

  • The standard deduction increased from $12,400 to $12,550 for single filers, $24,800 to $25,100 for married couples filing jointly, and $18,650 to $18,800 for heads of households.
  • The income tax brackets were adjusted for all filing statuses. If you were at the bottom of a tax bracket in 2020, you may have bumped down to a lower rate on your 2021 return.

You can find the complete list of inflation adjustments for the 2021 tax year at IRS.gov.[8]

Forgiven Student Loans Aren’t Taxable

When a debt is forgiven, the lender cancels some or all of the debt you owe, and you’re no longer required to repay it. Typically, forgiven debt is taxable income.

However, if you were able to get some or all of your student loans forgiven in 2021, you won’t owe taxes on the forgiven amount thanks to the Student Loan Tax Relief Act, which cancels up to $50,000 in federal student loan debt.[9]

Unemployment Is Taxable

For 2020 tax returns, the American Rescue Plan made up to $10,200 of unemployment benefits tax-free. This tax benefit is available only to those whose modified adjusted gross income is under $150,000 during 2020.[10]

Unfortunately, that provision expired at the end of 2020[11]. So if you received unemployment income in 2021, you can expect to pay taxes on those benefits this year.

Expect Delays

The pandemic was tough on everyone--including the IRS. The agency is still working through a backlog of paper returns and correspondence from last year and dealing with funding and staffing issues. Those delays are likely to impact the 2022 filing season.

In a press release, IRS Commissioner Chuck Rettig suggested three steps taxpayers can take to help ensure their 2021 tax return isn’t held up. Those recommendations include:[12]

  • E-filing rather than mailing a paper tax return
  • Requesting refunds via direct deposit rather than a paper check
  • Being sure to report the correct amounts of advanced child tax credit payments and EIPs

According to the IRS, most taxpayers can expect to receive their refund within 21 days of filing if they e-file, choose direct deposit, and have no other issues with their return.[12]

The good news? You have a few extra days to file your return this year. Due to the Emancipation Day holiday in Washington, D.C., most people have to file a return by April 18, 2022, instead of the typical April 15 deadline. As for taxpayers in Maine or Massachusetts, you’ll enjoy an extra 24 hours because the Patriots Day holiday in those states moves your tax filing deadline to April 19, 2022.

Sources

  1. IRS. "Third Economic Impact Payment," https://www.irs.gov/coronavirus/third-economic-impact-payment.
  2. IRS. "Understanding Your Letter 6475," https://www.irs.gov/individuals/understanding-your-letter-6475.
  3. IRS. "IRS: Expanded credits for families highlight tax changes for 2021; many people who don’t normally file should file this year," https://www.irs.gov/newsroom/irs-expanded-credits-for-families-highlight-tax-changes-for-2021-many-people-who-dont-normally-file-should-file-this-year.
  4. IRS. "IRS: Expanded credits for families highlight tax changes for 2021; many people who don’t normally file should file this year," https://www.irs.gov/newsroom/irs-expanded-credits-for-families-highlight-tax-changes-for-2021-many-people-who-dont-normally-file-should-file-this-year.
  5. IRS. "Advance Child Tax Credit Payments in 2021," https://www.irs.gov/credits-deductions/advance-child-tax-credit-payments-in-2021.
  6. IRS. "Understanding Your Letter 6419," https://www.irs.gov/individuals/understanding-your-letter-6419.
  7. The Federal Reserve. "What is inflation and how does the Federal Reserve evaluate changes in the rate of inflation?," https://www.federalreserve.gov/faqs/economy_14419.htm.
  8. IRS. "IRS provides tax inflation adjustments for tax year 2021," https://www.irs.gov/newsroom/irs-provides-tax-inflation-adjustments-for-tax-year-2021.
  9. Bob Menendez. "Warren, Menendez Bill to Make Student Loan Relief Tax-Free Passes as Part of COVID Relief Package, Clearing a Hurdle for Broad Loan Forgiveness," https://www.menendez.senate.gov/newsroom/press/menendez-warren-bill-to-make-student-loan-relief-tax-free-passes-as-part-of-covid-relief-package-clearing-hurdle-for-broad-loan-forgiveness#:~:text=The%20student%20loan%20tax%20relief,including%20private%20and%20institutional%20loans.
  10. IRS. "The American Rescue Plan includes retroactive tax benefits that can help taxpayers," https://www.irs.gov/newsroom/the-american-rescue-plan-includes-retroactive-tax-benefits-that-can-help-taxpayers.
  11. IRS. "Exclusion of up to $10,200 of Unemployment Compensation for Tax Year 2020 Only," https://www.irs.gov/forms-pubs/exclusion-of-up-to-10200-of-unemployment-compensation-for-tax-year-2020-only.
  12. IRS. "2022 tax filing season begins Jan. 24; IRS outlines refund timing and what to expect in advance of April 18 tax deadline," https://www.irs.gov/newsroom/2022-tax-filing-season-begins-jan-24-irs-outlines-refund-timing-and-what-to-expect-in-advance-of-april-18-tax-deadline.

About the Author

Janet Berry-Johnson is a CPA. Before leaving the accounting world to focus on freelance writing, she specialized in income tax consulting and compliance for individuals and small businesses. She lives in Omaha, Nebraska with her husband and son and their rescue dog, Dexter.

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Written on March 4, 2022
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Disclaimer: Self is not providing financial advice. The content presented does not reflect the view of the Issuing Banks and is presented for general education and informational purposes only. Please consult with a qualified professional for financial advice.

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