What is TAXiety?™
Each New Year brings new hope, new opportunities for growth, and a new tax season. But if you find yourself so stressed from the third that you forget about the first two, you may have TAXiety.
So what is TAXiety? Put simply, TAXiety is a common, distinct form of anxiety that arises from not understanding your taxes. Common symptoms include compulsive pencil chewing, stress ball kneading, and the desire to curl up into a small ball at the slightest mention of anything tax. While TAXiety typically occurs come tax season, it can strike any time tax preparation becomes a necessity.
However, there is a better and brighter way to ease TAXiety: Liberty Tax. Liberty Tax is more than a tax preparation servicer — we are a guide, making filing easy and leading taxpayers through the filing process while allowing them to be in control. And with the American tax landscape shifting from year to year, Liberty Tax is an invaluable tax resource, shedding light on confusing tax topics that arise from our 4 million word tax code. For example, what is the Child Tax Credit that’s been in the news lately? Is it too late to get your stimulus payment? And how exactly does the 2022 tax season differ from previous tax seasons? Thanks to Liberty Tax, you no longer have to be in the dark — let’s take a look at some top tax preparation tips for the coming tax season.
What is the Child Tax Credit?
One of the most talked-about aspects of this past tax season, the Child Tax Credit, is making a return to the world of tax preparation in 2022. Initially designed to help provide a boost for families during the continuing pandemic, this year’s variant has increased the potential payout to $3,600 per child, up from $2,000 a year prior. Because Congress wanted to send the payments as soon as possible, they paid some qualifying taxpayers half of their potential credit in advance based on their previous tax return.
If you had received part of the Child Tax Credit in advance, you should expect a letter from the IRS in the coming weeks. This letter will allow you to calculate any future Child Tax Credit payments you are eligible for during the upcoming tax season.
Do you feel you were eligible for the Child Tax Credit but didn’t receive anything? You’re not alone. Luckily, you can still receive the money. Here’s how: the IRS will determine your eligibility for the payments during this year's tax preparation process. Then, if you qualify based on your new return, you will receive your full Child Tax Credit, not reduced by those advance payments you never received as part of your overall tax refund.
Is It Too Late to Get My Stimulus Payment?
If you never received your third stimulus payment (officially known as an Economic Impact Payment or EIP3), good news — you don’t need to suffer from stimulus FOMO for much longer. The IRS will be issuing the third stimulus to qualifying taxpayers by adding it to their refund. During the tax preparation process, you will fill out a form called the Recovery Rebate Tax Credit worksheet, which the IRS will use to determine how much stimulus they owe you from last year.
How Does the 2022 Tax Season Differ From Last Year?
No two tax seasons are the same, but in recent memory, each year has differed dramatically from the last. This increase in annual change is primarily due to the flurry of taxpayer relief legislation in response to the COVID-19 pandemic. Here are a few quick tips on how tax preparation in 2022 will look a bit different than it did last year.
- No Need to Itemize to Claim Charitable Donations
- Before 202, taxpayers had to itemize their charitable donations to deduct them. In 2021, you can simply claim up to $300 for cash donations ($300 each for taxpayer and spouse if you are filing a joint return) — although this applies for gifts to qualifying charities only.
- Tax Bracket Income Thresholds Have Increased Due To Inflation
- It's hardly a secret — inflation was sky-high in 2021. To compensate, the IRS has raised the income thresholds for each tax bracket by roughly ten percent. For example, in 2021, taxpayers would pay a 10% tax rate on income earned up to $9,950. This year, taxpayers would pay the same 10% tax rate on income earned up to $10,275. While this won’t save most people a substantial sum on their taxes, it is a welcome development for all taxpayers.
- Unemployment Benefits Are Now Being Taxed Again
- As a welcome reprieve for furloughed workers during the initial stages of the Coronavirus pandemic, the IRS temporarily some made unemployment benefits tax-free. With hordes of Americans claiming unemployment benefits for the first time last year, paying taxes on these benefits is uncharted territory for many. If you claimed unemployment benefits in 2021, just remember to pay taxes on these benefits during the tax preparation process!
- The Tax Filing Deadline Is (Mostly) Back to Normal
- With last year’s deadline bouncing around like a ping-pong ball, many taxpayers felt anxious about the lack of certainty regarding the IRS’s deadline to file. However, this year, it looks like we will see a return to business as usual — at least regarding the tax deadline. The deadline to file your 2021 tax return is Monday, April 18, 2022. The only reason we won’t see the traditional April 15 deadline this year is that it falls on Emancipation Day, a holiday in Washington, DC.
- Heads up: Third-Party Payment Services Will Now Report Transactions to the IRS
- With the rise of the gig economy and the necessity for many to take work on the side, third-party payment services such as Venmo, Cashapp, Paypal, and Zelle have quickly become primary payroll providers for many. But be careful — these services are now required to report your transactions to the IRS if you make more than $600 in one year. If you do, expect a Form 1099-K from your payment service of choice.
Got More Questions? We Got the Answers.
We’re here to shed some light on your tax journey, making tax preparation a breeze and giving you the confidence that your taxes were done right. If something specific is giving you TAXiety and you want relief now, don’t hesitate — schedule an appointment with your local Liberty Tax Practitioner. In-person meetings not your thing? You can start your return by downloading our app from the Apple App or Google Play stores or utilize our virtual tax pro.
This New Year, resolve to let Liberty help ease your TAXiety. Your chewed-up pencils will thank you.