Tax season 2022 (Tax year 2021)

Hi Everyone,

I usually consider Feb 1 to be the real start of tax season for me. Most of the early software glitches have been worked out by now, plenty of “early filers” (guinea pigs) have already submitted their tax returns to the IRS and OR, and the gears should all be turning smoothly. So at this point, you should feel free to send your tax information over to me whenever you have it assembled and ready to go. If you could use some reminders about what I might need from you, see my list here.


I’m expecting three main problem areas for this tax season:

  • Multnomah PFA and Metro SHS personal income taxes. These taxes should only apply to you if your income is over $125k single or $200k joint. See the Revenue Division’s website for more info. The problem? The SHS and PFA tax returns aren’t e-file-able via most tax software providers, so we will need to file them directly via Portland Revenue Online (PRO). If you expect to be subject to one or both of these taxes, and if you don’t already have a PRO username, you’ll want to create one so that I can file these returns for you. Here is some info I’ve written up on how to do that. [Note: as of 1/31/22, it suddenly looks like I may be able to file these through PRO without your having to first create a username. You may want to set up a username regardless, but it may not be required.] I’m guessing that the additional expense to have me file these returns for you will be somewhere in the $80-$120 range, depending on the complexity of the returns in your particular tax situation. (“Less complex” would be no withholding, or withholding from a single W-2 only; “more complex” would be multiple W-2’s with withholding, modifications for pass-through entities, claiming a “credit for taxes paid to another state”, etc). If you wish to “opt out” and file these returns on your own, let me know, but I wouldn’t recommend trying it unless you’re up for a bit of a challenge.
  • Advanced child tax credit payments and third-round stimulus (“economic impact”) payments. These need to be “reconciled” on your 2021 tax return. The problem? Many people don’t remember how much they received, and the letters sent out by the IRS may not be accurate. Reporting incorrect amounts on your tax return will cause significant processing delays. If you don’t want to dig through your bank records, you can create an account at irs.gov, where you can look up accurate payment amounts. (Creating an irs.gov account now requires you to first create an ID.me account — we’ll see how that goes…) Some of you may have to pay back advanced child tax credit payments that your received, depending on your 2021 income, filing status, etc. Stimulus funds do not need to be paid back.
  • Married filing separately, to be better positioned for various tax credits. This was probably my least favorite aspect of tax season last year, but it saved a lot of clients a lot of money. The 2021 tax year will present similar opportunities for a small number of married couples in a fairly narrow tax situation. The problem? Well, none for you, but for me, it adds a substantial amount of work to what is already a very full plate. (Note that if I advised you to file separately for 2020, that doesn’t mean I’ll be advising you to do the same for 2021. The considerations/factors are different this year. If I think your situation is “borderline” – as in, it’s not obvious to me which filing status will be more beneficial – I will do an analysis for you and let you know the results. I can’t not do this, honestly.)

I’m expecting at least a couple of things to be easier this time around:

  • We shouldn’t need to delay filing. Unlike last year, I’m not expecting Congress to be retroactively changing major aspects of tax law mid-way through tax season. What a pain in the neck that was… (Of course, I could be wrong about this. There may be a lot of taxpayers upset about owing tax on their unemployment this year, or having to pay back advanced child tax credit payments, and Congress could bend under that pressure. Hopefully, if something like this happens, the IRS will be able to solve the problem without requiring anyone to file amended returns.)
  • I may be able to submit Portland business income tax returns directly from my tax software, rather than having to go through Portland Revenue Online directly for these filings. This adds a small amount of work on my side of things, but should save all of my clients who have business/rental/self-employment income a considerable amount of time and frustration. I will be dancing in the streets if this works the way it’s supposed to. I’ve been waiting for this for years. And my fingers are crossed that next year, the same will be possible with the SHS and PFA taxes I mentioned above.

There are a few tax items that might cause your tax return bottom line to change significantly compared to last year’s, all else equal:

  • Expanded childcare tax credit. Depending on your income range, and whether you have kids and pay for childcare outside of FSA funds, the childcare tax credit for 2021 can be anywhere from three to seven times higher than it’s been in the past.
  • Expanded child tax credit. If you received advance child tax credit payments, and your income jumped relative to 2020, then you may need to repay some or all of the advance payments.
  • Unemployment benefits. Unemployment benefits received in 2021 are fully taxable . This is in contrast to benefits received in 2020, when the first $10.2k in unemployment benefits was tax-free for most people.
  • Oregon kicker. The “kicker” functions as a 2021 tax credit for anyone who filed a 2020 Oregon tax return. The higher your 2020 Oregon income, the greater the 2021 kicker credit. Whatever you think of the kicker, it’s money I can’t not claim for you. If you don’t want it, and don’t need it, you can always donate it.

A few things I’d like to mention about the overall process this year:

  • Are you expecting a refund, or do you expect to owe? And how much? I may ask you how you think the numbers are going to turn out, before I start working on your return. If you’re expecting to owe a little, and you end up owing a lot, I want to make sure I take the time to explain why. Same with refunds. The general idea here is that my communication is going to be more efficient and more helpful if I know whether the results are or aren’t in line with what you were expecting.
  • Signature paperwork. Every year I look into e-signature options, and every year I’m disappointed. The tax return signature process as it currently exists is incredibly clunky. And yet somehow e-signatures only add to the clunkiness. (This is due mainly to the “knowledge-based authentication” process required by the IRS, which I won’t get going about.) Paper signature forms remain the easiest option, as difficult as that may be to believe. I want to remind you that I’m more than happy to print and mail the signature paperwork to you. The only reason for you to print it on your own is if you want to save the two days that it takes for the mail to get from me to you. Once you sign the forms, they can be returned to me in electronic (image) format; you can keep or discard the originals. Please ignore all of this for the time being! The IRS expanded its use of electronic signatures early in the pandemic, and there may be a way of reading/interpreting their guidance which would indicate that e-signatures are allowed, and without the hassle of “knowledge-based authentication”.
  • W-4 withholding. Clients often ask me how they should fill out their W-4’s. I have some general advice written up here. And there are some good tools out there to help you if you want to figure it out on your own — e.g. this one at HR Block, which is essentially the same as the IRS’s own W-4 calculator, but a little more user-friendly. If you need an answer that’s more specific to your tax situation, then I’m happy to take the time to walk through a W-4 calculator with you and explain the results in plain English, sometime after tax season ends. I will need to bill for the time, probably somewhere between 30 minutes and an hour. (There’s no back-of-the-envelope method. Nor can I simply eyeball it. It’s a process!)

There’s always more, of course, but I’ll leave it at that and deal with the rest on an individual basis. As always, let me know if you have questions!