IRS Form 1040 – What’s new?
Are you ready to tackle your tax return? Before you get started, make sure you’re aware of the new changes that have been made to Form 1040 for 2022. Many of these changes can be attributed to the American Rescue Plan Act of 2021 (ARP).
Some of these tax breaks might be familiar to you, including charitable contributions, the child tax credit, and economic impact payments. Some are less well-known. Here’s a look at five of them:
- Virtual Currency Disclosure – If you conducted any transactions involving virtual currency in 2021, check “Yes” on page 1 of Form 1040 or 1040-SR. Also, be sure to answer the question on virtual currency that’s located there. All taxpayers must report this information – not just taxpayers who conducted transactions involving virtual currency.
- Premium Tax Credit Expanded (PTC) – The American Rescue Plan Act expands the Premium Tax Credit by eliminating the 400% Federal Poverty Line limit on eligibility and raising credit amounts. In addition, individuals who receive unemployment compensation can claim the PTC in 2021 if they meet the other requirements.
- Special rules for taxpayers without a qualified child – The IRS has made it easier for you to claim the EIC if you do not have a Qualifying Child. For example, the minimum age has been lowered to 19-years-old, except for specified students who must be at least 24 years old at the end of the year, and lower-income former foster youth and qualified homeless youth
- PPP Loan Forgiveness – A forgiven PPP triggers a tax-exempt income, so there is no need for you to report the income on Form 1040 or 1040-SR. However, you need to report certain information related to your PPP loan.
- Sick & Family Leave Credits Extension and Expansion – Starting April 1, 2021, certain freelancers and independent contractors can claim credits for up to 10 days of paid sick leave and up to 60 days of paid family leave if they are unable to work or telework due to reasons related to coronavirus. These credits can be claimed from April 1, 2021, through September 30, 2021
In a nutshell
The American Rescue Plan Act caused a lot of changes to happen in our tax forms this year. So, before you head on out to prepare your tax return, make sure that you wield the latest information regarding taxes. An honest mistake is a mistake nonetheless in the eyes of the IRS! Save yourself the trouble of getting in trouble with the IRS, let our expert Enrolled Agents do your taxes for you this year!
