What’s New for Filing 2021 taxes?
Well, 2021 was quite the year, once again. But before you close the book on it, you’ll need to file your taxes. Wondering ‘what’s new for 2021 taxes’? If so, you’ve come to the right place.
If you’re re-examining your 2020 tax year, see our article on what was new for 2020, or our full checklist and questions for 2020 taxes.
Without further ado, changes and things to note for filing 2021 taxes:
New Tax Forms You Might Receive
These aren’t new, but more payment platforms are reporting payments that flow through their system. If your small business uses a third party or software to collect payments, be on the lookout for more 1099s. And remember – you have to report all income, even if you don’t receive a 1099. These forms should just be confirming the income you already knew about.
The IRS expanded the Child Tax Credit for 2021, and some taxpayers received an advance of their credit via monthly payments. If you don’t check your bank account often, you may not have noticed you received them. But the IRS is sending letters showing the amounts paid so that advance child tax credit payments can be documented on your 2021 tax return. If you’re married, you and your spouse will receive separate letters.
You may remember your tax preparer asking you last year how much you received in Economic Impact Payments. And if you’re like many of our clients, you responded with “oh yeah, I kind of remember that.” For 2021, if you received an EIP during the third round of stimulus payments, you’ll receive a letter from the IRS indicating the amount. So thankfully this year you won’t have to go searching through your bank statements to find the amount.
Discuss With Your Tax Preparer
Employer Payroll Credits
If you have employees on payroll, be sure to discuss the COVID-related relief options with your tax preparer. The Employee Retention Credit went through a lot of changes in the past year and a half, and there is still time to claim these credits if you qualify. If you’ve already received an ERC, your tax preparer will need to know so they can adjust your payroll expenses accordingly.
100% Business Meal Deductions
Hopefully you have always reported your business meals. But for 2021, be certain you’re reporting all of your eligible meals since the IRS is allowing a 100% deduction for 2021 and 2022. You can read about what makes a meal deductible for your business here.
Paycheck Protection Program Loans
I know, you thought we were done with these. But, if you received a loan in 2021 or had one forgiven in 2021, your tax preparer will want to know that.
Buy Any Crypto?
Nothing New for 2021
Just like last year (and the year before), your tax preparer will ask you if you traded any cryptocurrency in 2021. If you did any buying or selling of any form of cryptocurrency (or even if you own some and aren’t sure if you did anything with it), be prepared to discuss that with your tax preparer.
There weren’t as many changes for the 2021 tax filing season as we saw in 2020. But every year, the list of important tax documents the IRS publishes seems to grow. If you get a document that looks like it’s related to taxes, err on the side of caution and give it to your tax preparer. If any mail from the IRS makes you anxious, don’t panic, and don’t ignore it either.
If you’re looking for additional tax info, check out:
Home office deduction during the pandemic
Pandemic-related tax deductions (or not)
Tax planning explained