Tax season 2022: What you need to know

From stimulus checks to unemployment to child tax credits, there were many changes that could impact your taxes for 2021. We recommend discussing the following with your tax professional to determine if any of these items apply to your situation. Keep in mind, this list is not all-encompassing, is only meant for educational purposes and is not intended as tax advice.
Economic impact payments (2021 recovery checks)
If you received a third-round stimulus check in early 2021, the IRS does not require you to include it in your taxable income. This money also will not reduce your refund or increase the amount of income tax you owe for 2021.
Steps to take:
Unemployment compensation
For 2020, pandemic-related legislation offered a tax break for some unemployment compensation. This changes for 2021, with all unemployment compensation subject to federal income tax again.
Steps to take:
COVID-19-related distributions from retirement accounts
If you took a coronavirus-related distribution from a retirement account in 2020 and opted to spread the amount equally over three years, you will need to include the relevant portion of the distribution on your 2021 tax return. You can recontribute any portion of the distribution (that you haven't already recontributed) back into any retirement account eligible to receive a rollover for up to three years from the day after you received the distribution.
Steps to take:
2020 COVID-19-related distributions:
Recontributions:
Required minimum distributions (RMDs) from retirement accounts
RMDs resumed for the 2021 tax year and had to be taken by Dec. 31 unless the taxpayer’s birthdate is between July 1 and Dec. 31, 1949, in which case the start date is deferred to April 1, 2022. If you have an inherited IRA, you may also have needed to take an RMD by the end of 2021.
Steps to take:
Charitable contributions
If you opt for the standard deduction, you can deduct up to $300 of cash contributions ($600 if filing jointly) to qualified charities. If you itemize your deductions for charitable giving, the 60% of adjusted gross income limit for cash gifts is suspended for 2021.
Steps to take:
Child tax credit
You can now claim up to $3,600 for children under 6 years old and up to $3,000 for children ages 6 to 17. It's also refundable, meaning you can receive the credit even if it's larger than the amount of taxes you owe. The credit starts phasing out at $75,000 for single filers, $150,000 for joint filers and $112,500 for heads of household. As many families already know, up to half of the credit may have been paid out in advance payments made in the second half of 2021.
Steps to take:
Child and dependent care credit
If you qualify for this credit, you'll find it's more generous for 2021, with up to $4,000 for one qualifying person and up to $8,000 for two or more qualifying persons. The credit also is potentially refundable and phases out differently from how it has in prior years, which will benefit some families but make others ineligible.
Steps to take:
IRA contributions - digital
While there aren't any changes to IRA contributions this year, it's still important to consider. Contributing to an IRA can help you make progress toward your retirement goals and can generally reduce your taxes now or in the future. The IRA contribution limit in 2021 is $6,000 per individual, or $7,000 if you're 50 or older, subject to certain income requirements. You can make IRA contributions for 2021 up to the tax filing deadline of April 18.
Steps to take:
Meagan Dow leads the Analyst team within Edward Jones Client Needs Research. This team focuses on creating advice and guidance helping investors prepare for retirement, enjoy their retirement, save for education, plan their estates and protect their financial goals.
Meagan is a Chartered Financial Analyst and a Certified Financial PlannerTM.
Edward Jones, its employees and financial advisors cannot provide tax or legal advice. You should consult your attorney or qualified tax advisor regarding your situation. This content should not be depended upon for other than broadly informational purposes.