You have several events to plan for in the near future. Starting with the estimates due in January for the last payments of 2021 taxes. Check your income and expenses one last time to see if you need to raise the number due this month. It is always better to be higher than lower when the surprises pop up on the actual return filing.
Then there are the W2s and 1099s due out by the end of the month for all you employers. Don’t miss that deadline. It is much harder to cope with disgruntled employees or contractors than the government agencies.
If you are going to do extensions, do not hesitate. Give yourself a window of lower penalties if necessary. For those of you that we file the extensions for each year, I will contact you with 1; the fact that the extension has been filed and 2; the actual extension form for your records. If you do not see this in email from me by March 1st, contact me to have the extension filed.
On the IRA and retirement accounts, you have reached a new year. On December 31st, your retirement accounts and IRAs (Not ROTH IRAs) were valued. That value is important. If you reached 72 last year or have an inherited IRA, you are required to take a portion of that value. So check your provider, broker, banker holding the account and take at least the required minimum distribution also referred to as your RMD.
Last year, if you had children under the age of 17 listed on your return, you were entitled to a child tax credit which varied from $3000 to $3600 for the year. That goes away in 2022. You can thank Joe Manchin, multimillionaire Senator from West Virginia for that expiration. But for the 2021 year, if you qualified for the tax credit, it will be reflected on your tax return.
Last year, if you had unemployment income, you were given a $10,200 tax free exemption on the first $10,200 reported by the State, on your Federal return. The State of Illinois and several states did not exempt the income.
If you filed and forgot to claim the exemption, you need to file a Federal Amended 1040. That exemption goes away for the 2021 year. Thank Senator Manchin for that item as well. 100% of your 2021 unemployment is taxable.