PHOENIX — The IRS will start accepting tax returns for 2021 on January 24, 2022, but how do you know you are ready to file? There have been a number of changes in the past year that could impact your refund amount.
The first is in regard to the Child Tax Credit.
To start, the credit was increased from $2,000 to $3,000 for children 6- to 17-years-old and to $3,600 for each child under 6-years-old.
In addition, parents could opt to take 50% of that credit in upfront payments, giving them an extra $300 a month.
Those payments stopped in December, and now with tax season here, the IRS is making sure those who got the payments qualified for them.
"Not everybody has to pay it back," said Yesenia Simmons a licensed CPA in Phoenix.
During a Facebook Live town hall with the Let Joe Know team, Simmons shared that families who are married and filing jointly can make up to $150,000 before the credit is reduced. It's $75,000 if filing a single tax return.
She says if you fall into that category, to "take a look and see something that has also changed this year, like charitable contributions."
Prior to this year, you only benefited from claiming charitable contributions if you itemized your deductions, but now you can take $600 on top of your standard deduction if you're married, reducing your total income.
Simmons says you can also contribute to a health savings plan up to the tax deadline for it to count in the same way and protect your child tax credit at the same time.
Big changes also at the state level for 2021 taxes:
They include a new tax bracket for small business owners. Something Rory Wilson with the Arizona Department of Revenue says can change the amount of tax they owe when all is said and done.
"This was one of the propositions that came out to try to help that help those small businesses along," said Wilson.
However, he says veterans may see the biggest change in Arizona with military pensions no longer being taxable - at all.
Both of our experts say the best way to file is electronically, you could get your refund six times faster than if you file by mail, which has been backlogged due to the COVID-19 pandemic.
Here's a list of free ways to file your Arizona Taxes. (Each platform has qualifying criteria that need to be met).
Here's how to file federal taxes for free(if you qualify).
And here are ways to get tax prep help.
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