2021 TAX LAWS

UPDATED 1/18/22:   The IRS is will open on 1/24/22 and will be accepting most electronically filed tax returns at that time. They will be processing returns electronically the entire year with the exception of a short shutdown from November to January. We will also be able to electronically file previous year’s (2020 and 2021) tax returns as well.  

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There is much confusion surrounding the stimulus payments.  Any payments you may have received were actually considered advances.  In 2021 (2020 taxes), the first two possible payments were reconciled. This year (2021 taxes), they will reconcile any payments from the 3rd possible stimulus.  The IRS is sending out letters as a reminder of what you received.  Please be sure to put that letter with all of your other tax documents.  

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Some individuals with children may have received checks or direct deposits from July to December (6 payments) as an advance of the Child Tax Credit.  The IRS will be sending letters for those payments as well, so be sure to save them.  Remember, these were advances and will reduce the amount of credits you receive at tax time.  

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As in past years, any taxes filed in the 2022 filing season (2021 Taxes), refunds for tax returns that claim the Earned Income Tax Credit or the Child Tax Credits may be held longer while the IRS verifies eligibility.  Therefore, some early returns (filed before mid to late February), which include these credits may result in delayed refunds (Mid March), rather than within the normal time frame.

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As in 2021, Form 1095-A (Health Insurance Marketplace Statement) may not be sent to all individuals that obtained their 2021 health insurance at the Federal or a State Marketplace. Those who paid for that insurance will receive a 1095-A. This form is scheduled to be brought back in 2023 for all individuals who were insured.

Forms 1095-B and 1095-C for employer insurance or Medicaid coverage should be sent by January 31, 2022 and are recommended as proof of coverage, as well as serving as a proof of children living with you. While the 1095-A is mandatory, the 1095-B or 1095-C forms are not, and not having them does not prevent you from filing your taxes.

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All taxpayers eligible for the Child Tax Credits (CTC & ACTC), Earned Income Credit (EITC), or College Tax Credit (AOTC) must answer a few simple questions, and provide some two types of written proof for each eligible child that show that that child lived in their home in the U.S. during 2021.  Examples of acceptable documents include school, insurance, and medical records, or any other document that is dated during 2021 and that shows the child’s name and the taxpayer’s address. The IRS has become very strict regarding this requirement, and without this documentation, will deny your claim for the credits.

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All taxpayers with foreign assets over $50,000 are required to file Form 8938 with their taxes. Additionally, any taxpayer with foreign assets over $10,000 must file Fin Cen 114 (FBAR) with the Treasury Department every year. Requirements are a list of bank names, complete addresses, account numbers, and high balances during 2021.

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For the most part, ITIN renewals have been completed at this time.  

Any ITINs not used during the last three years must be renewed, as do any numbers that were required to be renewed and were not.  If the numbers are not renewed, they will be disallowed from the tax return, and no refunds will be issued. It would then be necessary to file Form W-7 with a paper amended tax return. Please note that this additional process will cost you extra money for filing, and will delay your refund by 6 months or more.  Please call us to find out the new requirements for filing and which documents will be required in order to apply or renew. All signatures and documents must be original, and dependents outside of the U.S.A. are no longer eligible. Again, no copies will be accepted (Original documents only).

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Finally, we can not stress enough the importance of avoiding on-going scams!

The IRS or State of Illinois will NEVER e-mail, call or text you, without your prior permission. If you are contacted, just hang up on them or ask them to send you the information in the mail using the address they have on file. Inform them that you will pass information regarding the call to your local police.  This will stop them in their tracks. NEVER give them ANY information!!!