From the Financial Hotline
By: Financial Hotline
Winter 2022 (Vol. 39, No. 4)
Q: Who received a stimulus check in 2021?
A: Married filing jointly earning less than $150,000 a year, head of household earning less than $112,500 and individuals earning less than $75,000 a year should have received the full $1,400 per person. Families earning up to $160,000 per year and individuals earning up to $80,000 per year were eligible to receive stimulus checks for a smaller amount. Unlike the previous two rounds, you should have received stimulus payments for all your dependents, including adult dependents and college students.
Q: I qualified but did not receive a third stimulus check in 2021. How do I claim the 2021 Recovery Rebate Credit?
A: If you didn’t get the full amount of the third Economic Impact Payment, you may be eligible to claim the 2021 Recovery Rebate Credit and must file a 2021 tax return – even if you don’t usually file taxes - to claim it. Your 2021 Recovery Rebate Credit will reduce any tax you owe for 2021 or be included in your tax refund. In addition, if you didn’t get the full amount of the first and second Economic Impact Payment, you may be eligible to claim the 2020 Recovery Rebate Credit and must file a 2020 tax return – even if you don’t usually file taxes - to claim it.
Q: What is the standard mileage rate for tax year 2021?
A: For 2021, the rate is 56 cents per business mile driven, 16 cents per mile for moving or medical purposes and 14 cents per mile for charity miles driven. Taxpayers always have the option of claiming deductions based on the actual costs of using a vehicle rather than the standard mileage rates.
Taxpayers can use the standard mileage rate but must opt to use it in the first year the car is available for business use. Then, in later years, they can choose either the standard mileage rate or actual expenses. Leased vehicles must use the standard mileage rate method for the entire lease period (including renewals) if the standard mileage rate is chosen.
Q: I was single almost all of 2021 but married in December. How do I determine which filing status is my best option?
A: A taxpayer’s filing status defines the type of tax return form they should use when filing their taxes. Filing status can affect the amount of tax they owe, and it may even determine if they have to file a tax return at all.
There are five IRS filing statuses. They generally depend on the taxpayer’s marital status as of Dec.31. However, more than one filing status may apply in certain situations. If this is the case, taxpayers can usually choose the filing status that allows them to pay the least amount of tax. Here are the five filing statuses:
- Single. Normally this status is for taxpayers who are unmarried, divorced or legally separated under a divorce or separate maintenance decree governed by state law.
- Married filing jointly. If a taxpayer is married, they can file a joint tax return with their spouse. When a spouse passes away, the widowed spouse can usually file a joint return for that year.
- Married filing separately. Married couples can choose to file separate tax returns. When doing so it may result in less tax owed than filing a joint tax return.
- Head of household. Unmarried taxpayers may be able to file using this status, but special rules apply. For example, the taxpayer must have paid more than half the cost of keeping up a home for themselves and a qualifying person living in the home for half the year.
- Qualifying widow(er) with dependent child. This status may apply to a taxpayer if their spouse died during one of the previous two years and they have a dependent child. Other conditions also apply.