Student Loan Holiday-Gift!
President Joe Biden’s administration announced Wednesday, Dec. 22, that it is extending the pause on federal student loan payments until May 1, 2022. Payments will not resume until mid-2022 and interest rates will remain at 0%. President Biden cited ongoing pandemic-related challenges faced by student loan borrowers as reasoning for the new extension in a White House press release. 
#studentloanrepayment #ajoyoustaxresult #taxes2022

Beginning with 2021, the investment income amount limit for Earned Income Tax Credit (EITC) increases from $3,650 to $10,000. This means that taxpayers who in prior years were disqualified from the EITC due to investment income may now be eligible. Investment income includes (but not an all-inclusive list):

Interest
Dividends
Capital gains
Royalties
Rental income
Passive activity income

If you receive a K-1 there may investment income on it that would disqualify you for the Earned Income Credit. I have had this happen to many clients over the years that received some inheritance or received a K-1 for other reasons. Too bad they did not make the law retroactive. We would have gone back and amended a few returns and helped a few people get extra money during these trying times.

​#ajoyoustaxresult #TS22 #EITC22 #EITCInvestmentIncome

For 2021 tax returns, wage earners who had their income drop will be pleased that the retroactive provision of the Earned Income Tax Credit which allowed taxpayers to use their 2019 earned income to calculate the credit for Tax Year 2020 is allowing taxpayers to use it again for 2021.

Taxpayers will be allowed to calculate their Earned Income Tax Credit for 2021 using their 2019 earned income if 2021 earned income is less than it was in 2019. Even more reason for everyone to research the new tax laws or make sure their tax preparer/CPA is CURRENT with all the tax law changes.

If self-prepared, make sure you look at your 2019 return for the information to be used. It will be EXTRA important that you take their 2019 tax return to your tax preparer/CPA (or include it in documents sent virtually). If the tax preparer/CPA says they do not need the copy (unless they actually prepared your 2019 and already have a copy) then you need to ask them why they are not following the latest tax laws. Even if they did prepare your 2019, ask if they are following the new tax law regarding the Lookback to 2019.

Don’t miss out on credits!
#ajoyoustaxresult #TS22 #earnedincomecreditlookback

For Tax Year 2021, the Child and Dependent Care Credit has been improved and expanded.
The maximum expenses on which the credit is based has been increased from $3,000 for one qualifying child to $8000 and from $6,000 for two or more qualifying children $16,000.

The credit is now FULLY REFUNDABLE for all taxpayers who have a principal place of abode in the U.S. for more than one-half the year. What this means is for 2021, that even if the credit exceeds the amount of Federal income tax that is owed, the full amount of the refund is still claimed and any credit in excess of the tax liability is refunded. Yes, it can increase your refund.

The maximum credit rate has also been increased from 35% to 50%. Because of this, the maximum credit is now $8,000. Irs.gov has Child and Dependent Care Credit Thresholds chart for the 2021 AGI thresholds and credit rates.
Taxpayers must identify all persons or organizations that provided care for their child, dependent, or spouse. This identification must include the provider’s name, address, and taxpayer identification number (TIN- EIN or Social Security Number).
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#ajoyoustaxresult #2021childcarecredit #2021dependentcarecredit

Did you know you do not have to have a qualifying child for EIC/EITC (Earned Income Credit/Earned income Tax Credit) on your Federal Tax Return? And starting with your 2021 filing, there is no maximum age any longer! Prior years the cut off was age 65! They have also changed the minimum age to qualify. It is now NINETEEN- yes, 19 years old. Before it was a minimum age of 25. Also- it if you are a qualified former foster youth or qualified homeless youth, you can qualify, WITHOUT A QUALIFYING CHILD, as young as age 18.

The other requirements for EIC/EITC remain the same such as: you must show proof of earned income; you must not qualify to be treated as the dependent of another person (even if that person does not claim the taxpayer as a dependent); you must have lived in the United States more than half the year (Military personnel stationed outside the U.S. are considered to live in the U.S.); you must have a valid Social Security number (ITIN or ATIN does not work, nor does one marked “Not Valid For Employment”); you may not file as Married Filing Separate.

A good place to start looking at requirements is the IRS website!
https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit/who-qualifies-for-the-earned-income-tax-credit-eitc#basic

​#ajoyoustaxresult #taxseason22 #enrolledagent