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Tax & AccountingAugust 18, 2022

Tax pros can help extended filer clients by reviewing available tax benefits

As we inch closer to the October 17 filing deadline for the 19 million taxpayers who filed for extensions, don't forget that there are important tax credits and deductions, some relatively new, that can provide significant benefits to our taxpayer clients.

This year, the IRS received 19 million requests for extensions to file until October 17. Tax professionals should carefully review their clients' accounts to ensure that they are taking advantage of tax credits, deductions, and other tax benefits that may be available.

The IRS notes the following tax benefits that may be applicable to taxpayers when filing their tax returns:

  • Earned Income Tax Credit: Qualified low- to moderate-income workers and families may get a tax break.
  • Child Tax Credit: Families can claim this credit, even if they received monthly advance payments during the last half of 2021.
  • Child and Dependent Care Credit: Families who pay expenses for the care of a qualifying individual so they can work, or look for work, can get a tax credit worth up to $4,000 for one qualifying person and $8,000 for two or more qualifying persons.
  • Recovery Rebate Credit (RRC): Those who missed out on last year's third round of Economic Impact Payments (EIP3), also known as stimulus payments, may be eligible to claim the RRC. This credit can also help eligible people whose EIP3 was less than the full amount, including those who welcomed a child in 2021.
  • Deduction for gifts to charity: Most taxpayers who take the standard deduction can deduct eligible cash contributions they made to charity during 2021. Married couples filing jointly can deduct up to $600 in cash donations, and individual taxpayers can deduct up to $300 in donations. In addition, itemizers who make large cash donations often qualify to deduct the full amount in 2021.
  • American Opportunity Tax Credit and the Lifetime Learning Credit: Tax credits for higher education can help offset taxpayers' tuition and other costs by reducing the amount of tax owed on their tax return.
  • Retirement Savings Contributions Credit (Saver's Credit): A tax credit is available for making eligible contributions to an individual retirement account or employer-sponsored retirement plan.

Don't forget about any required additional client documentation

In addition to having the standard W-2s and 1099s, tax pros should make certain they have additional documentation for their clients' claims. This additional documentation includes two statements issued by the IRS:

  • Letter 6419, showing a taxpayers total advance Child Tax Credit payments
  • Letter 6475, showing a taxpayers total EIP3 payments

Don't forget that taxpayers can also use their IRS Online Account to see the total amounts of their third round of Economic Impact Payments or advance Child Tax Credit payments. Married spouses who received joint payments will need to sign into their own accounts to obtain their separate amounts.

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Mark Friedlich
Vice President of US Affairs for Wolters Kluwer Tax & Accounting
Mark Friedlich, a CPA & tax lawyer, is the Vice President of US Affairs for Wolters Kluwer Tax & Accounting. He is a member of the U.S. Senate Finance Committee’s Chief Tax Counsel’s Advisory Board, advisor to 14 state taxing authorities, and has been a member of the American Bar Association’s Tax Section and AICPA’s Tax Section leadership teams. Prior to joining Wolters Kluwer he was a COO and Principal at PwC.


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