Podcast: Gathering Your Tax Material for 2021 Taxes

Gathering Your Tax Material for 2021 Taxes

Written by Jeff Dvorachek

January 20, 2022

Now is the time that people are receiving their tax statements for last year. You can expect to see forms like W-2s and 1099s for interest and dividends earned. There are also statements showing how much mortgage interest and charitable contributions you made. But there are some forms that you will receive based on the tax changes that happened in 2021. This podcast covers the tax material you need to gather up for your 2021 taxes.

Back in March, we received the third stimulus check right?

  • Good memory. Yes the first and second stimulus checks were actually prepayment on your 2020 return, but the third one was a prepayment for 2021.
  • Many people received the maximum amount of $1,400 per person. But if you did not receive the maximum and now qualify for it, you will get the additional amount as a credit on your 2021 return.
  • The important reminder here – The IRS will be sending Form 6475 to tell you how much you received. You will need to send this form to your tax preparer.

And what about the monthly child tax credit payments that people received?

  • This is similar to the stimulus payments.
  • For 2021, legislation increased the child tax credit to $3,000 or $3,600 per child under 6.
  • Then starting in July, people started to receive an advanced payment on those credits.
  • Problem is that some people received them and others did not, depending on the circumstances.
  • In any event, when taxpayers file their return, they need to know how much they received in 2021.
  • Any amount received will be treated as a reduction of the credit.
  • The important note here is that the IRS will send out a Form 6419 to let people know how much they received. This form also needs to be sent to their tax preparer.

Lastly, retirement income is back for 2021.

  • After a year off, it is back.
  • In 2020, the required minimum distributions were eliminated so a retired person did not need to take anything out of their IRAs.
  • Well in 2021, they are back. So they will want to make sure that they save those Form 1099-r.
  • But an important note here – If you made any Qualified Charitable Distributions (QCD) directly from your IRA to a charity, they will not be listed on the 1099. You will need to tell your tax preparer about these.
  • Just a reminder that QCD can be made by a person age 70 ½ or older. These distributions to a charity can allow a person to take a charitable deduction – even if they do not itemize.

Be sure to talk to a tax professional if you have any questions about what you need for your 2021 taxes.

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Jeff Dvorachek
I joined Hawkins Ash CPAs in 1998. I am the partner-in-charge of the Manitowoc, WI, office and tax director for the firm. I have thorough experience providing tax services to individuals, commercial businesses, nonprofit entities and estates and trusts. I also provide compilation and review services. I lead the Tax Committee and am a member of the Information Technology Advisory Committee.

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