The Indian Panorama

Tag: IRS

  • Tax Time Guide: Electronic tax payment and agreement options available to taxpayers who owe

    Tax Time Guide: Electronic tax payment and agreement options available to taxpayers who owe

    WASHINGTON, D.C. (TIP): The Internal Revenue Service, on March 22,  reminded taxpayers who have a tax bill that there are several ways to make payments, and there are options for many people who can’t pay their tax bill in full by April tax deadline. The deadline to submit 2021 tax returns or an extension to file and pay tax owed this year falls on April 18, instead of April 15, because of the Emancipation Day holiday in the District of Columbia. Taxpayers in Maine or Massachusetts have until April 19, 2022, to file their returns due to the Patriots’ Day holiday in those states. Some taxpayers who were victims of a natural disaster have even longer to file their returns.

    The IRS reminds people to timely file their tax return and pay whatever they can by the filing deadline to avoid late filing and interest penalties.

    Sign in to pay and see payment history

    Taxpayers can use their Online Account to securely see important information when preparing to file their tax return or following up on balances or notices. Taxpayers can make a same-day payment for a 2021 tax return balance, an extension to file, or estimated taxes, which are all due by April deadline for most taxpayers. They can also view:

    Their Adjusted Gross Income, Economic Impact Payment amounts and advance Child Tax Credit payment amounts needed for their 2021 return,

    Payment history and any scheduled or pending payments,

    Payment plan details and

    Digital copies of select notices from the IRS.

    Ways to pay

    Electronic Funds Withdrawal (EFW): This option allows taxpayers to file and pay electronically from their bank account when using tax preparation software or a tax professional. This option is free and only available when electronically filing a tax return.

    Direct Pay: Direct Pay is free and allows taxpayers to securely pay their federal taxes directly from their checking or savings account without any fees or preregistration. Taxpayers can schedule payments up to 365 days in advance. After submitting a payment through Direct Pay, taxpayers will receive immediate confirmation.

    Electronic Federal Tax Payment System: This free service gives taxpayers a safe and convenient way to pay individual and business taxes by phone or online. To enroll and for more information, taxpayers can call 800-555-4477, or visit eftps.gov.

    Credit card, debit card or digital wallet: Individuals can pay online, by phone or with a mobile device through any of the authorized payment processors. The processor charges a fee. The IRS doesn’t receive any fees for these payments. Authorized card processors and phone numbers are available at IRS.gov/payments.

    Cash: For taxpayers who prefer to pay in cash, the IRS offers a way to pay taxes at one of its Cash Processing Companies at participating retail stores. The IRS urges taxpayers choosing this option to start early because it involves a four-step process. Details, including answers to frequently asked questions, are at IRS.gov/paywithcash.

    Check or Money Order: Payments made by check or money order should be made payable to the “United States Treasury.” To help ensure that the payment gets credited promptly, taxpayers should also enclose a Form 1040-V payment voucher and print on the front of the check or money order: “2021 Form 1040”; name; address; daytime phone number; and Social Security number.

    File by April 18, 2022 for most taxpayers

    The most important thing everyone with a tax bill should do is file a return by the April 18 due date, for most taxpayers (even if they can’t pay in full). Taxpayers may also request a six-month extension to file by October 17, 2022, to avoid penalties and interest for failing to file on time.

    Though automatic tax-filing extensions are available to anyone who wants one, these extensions don’t change the payment deadline. It is not an extension to pay. Visit IRS.gov/extensions for details.

    Usually anyone who owes tax and waits until after that date to file will be charged a late-filing penalty of 5% per month. So, if a tax return is complete, filing it by April 18 is always less costly, even if the full amount due can’t be paid on time. IRS Free File is an easy, quick way to file that is available to eligible individuals and families who earned $73,000 or less in 2021. IRS Free File is available on IRS.gov.

    Pay what you can

    Interest, plus the late-payment penalty, will apply to any payments made after April 18. Making a payment, even a partial payment, will help limit penalty and interest charges. The fastest and easiest way to pay a personal tax bill is with Direct Pay, available only on IRS.gov. For a rundown of other payment options, visit IRS.gov/payments.

    The IRS urges taxpayers to first consider other options for payment, including getting a loan to pay the amount due. In many cases, loan costs may be lower than the combination of interest and penalties the IRS must charge under federal law. Normally, the late-payment penalty is one-half-of-one percent (0.5%) per month. The interest rate, adjusted quarterly, is currently 3% per year, compounded daily.

    If a loan isn’t possible, the IRS can often help.

    Online payment plans

    Most individual taxpayers qualify to set up an online payment plan with the IRS, and it only takes a few minutes to apply. Applicants are notified immediately if their request is approved. No need to call or write to the IRS. The IRS notes that online payment plans are processed more quickly than requests submitted with electronically-filed tax returns. If a taxpayer just filed their return and knows that they’ll owe a balance, they may be able to set up a payment plan online before they even receive a notice or bill.

    There are two main types of online payment plans:

    Short-term payment plan – The payment period is 180 days or less and the total amount owed is less than $100,000 in combined tax, penalties and interest. There’s no fee for setting one up, though interest and the late-payment penalty continue to accrue.

    Long-term payment plan – Payments are made monthly, and the amount owed must be less than $50,000 in combined tax, penalties and interest. If the IRS approves a long-term payment plan, also known as an installment agreement, a setup fee normally applies. But low-income taxpayers may qualify to have the fee waived or reimbursed. In addition, for anyone who filed their return on time, the late-payment penalty rate is cut in half while an installment agreement is in effect. This means that the penalty accrues at the rate of one-quarter-of-one percent (0.25%) per month, instead of the usual one-half-of-one percent (0.5%) per month.

    Taxpayers who do not qualify for an online payment agreement may still be able to arrange to pay in installments. See Additional Information on Payment Plans for more information.

    Other payment options

    Some struggling taxpayers may also consider using these other payment options:

    Delayed collection

    If the IRS determines a taxpayer is unable to pay, it may delay collection until their financial condition improves. However, the total amount owed will still increase because penalties and interest are charged until paid in full. Taxpayers can request a delay by calling the phone number on their notice or 800-829-1040.

    Penalty relief

    Some taxpayers qualify to have their late-filing or late-payment penalties reduced or eliminated. This can be done on a case-by-case basis, based on reasonable cause. Alternatively, where a taxpayer has a history of compliance, the IRS can typically provide relief under the First Time Abatement program. Visit IRS.gov/penaltyrelief for details.

    Offer in Compromise

    Some taxpayers qualify to settle their tax bill for less than the full amount due, through an offer in compromise. Though there is typically a $205 non-refundable application fee, it is generally waived for low-income taxpayers and for offers based on doubt as to liability. The Offer in Compromise Pre-Qualifier tool can help determine eligibility for anyone interested in applying.

    The IRS reminds taxpayers that they have rights and protections throughout the collection process. For details, see Taxpayer Bill of Rights and Publication 1, Your Rights as a Taxpayer. For more information about payments, see Topic No. 202, Tax Payment Options, on IRS.gov. Taxpayers should know before they owe. The IRS encourages all taxpayers to check their withholding with the IRS Tax Withholding Estimator.

    This news release is part of a series called the Tax Time Guide, a resource to help taxpayers file an accurate tax return. Additional help is available in Publication 17, Your Federal Income Tax.

    (Press Release)

  • IRS warning: Scammers work year-round; stay vigilant

    IRS warning: Scammers work year-round; stay vigilant

    WASHINGTON(TIP): As the new year begins, the Internal Revenue Service reminds taxpayers to protect their personal and financial information throughout the year and watch out for IRS impersonation scams, along with other schemes, that try to trick people out of their hard-earned money. These schemes can involve text message scams, e-mail schemes and phone scams. This tax season, the IRS also warns people to watch out for signs of potential unemployment fraud.

    “With filing season underway, this is a prime period for identity thieves to hit people with realistic-looking emails and texts about their tax returns and refunds,” said IRS Commissioner Chuck Rettig. “Watching out for these common scams can keep people from becoming victims of identity theft and protect their sensitive personal information that can be used to file tax returns and steal refunds.”

    The IRS, state tax agencies and the nation’s tax industry – working together in the Security Summit initiative – have taken numerous steps since 2015 to protect taxpayers, businesses and the tax system from identity thieves. Summit partners continue to warn people to watch out for common scams and schemes this tax season.

    Text message scams

    Last year, there was an uptick in text messages that impersonated the IRS. These scams are sent to taxpayers’ smartphones and have referenced COVID-19 and/or “stimulus payments.” These messages often contain bogus links claiming to be IRS websites or other online tools. Other than IRS Secure Access, the IRS does not use text messages to discuss personal tax issues, such as those involving bills or refunds. The IRS also will not send taxpayers messages via social media platforms. If a taxpayer receives an unsolicited SMS/text that appears to be from either the IRS or a program closely linked to the IRS, the taxpayer should take a screenshot of the text message and include the screenshot in an email to phishing@irs.gov with the following information:

    Date/time/time zone they received the text message

    Phone number that received the text message

  • All third Economic Impact Payments issued; IRS

    All third Economic Impact Payments issued; IRS

    Parents of children born in 2021, guardians and other eligible people who did not receive all of their third-round EIPs can claim up to $1,400 per person through the 2021 Recovery Rebate Credit

    WASHINGTON , D.C. (TIP): – The Internal Revenue Service announced on January 26,  that all third-round Economic Impact Payments have been issued and reminds people how to claim any remaining stimulus payment they’re entitled to on their 2021 income tax return as part of the 2021 Recovery Rebate Credit.

    Parents of a child born in 2021 – or parents and guardians who added a new child to their family in 2021 – did not receive a third-round Economic Impact Payment for that child and may be eligible to receive up to $1,400 for the child by claiming the Recovery Rebate Credit.

    While some third-round Economic Impact Payments may still be in the mail, the IRS is no longer issuing first-, second-, or third-round Economic Impact Payments. Through December 31, the IRS issued more than 175 million third-round payments totaling over $400 billion to individuals and families across the country while simultaneously managing an extended filing season in 2021.

    Third-round Economic Impact Payments were advance payments of the 2021 Recovery Rebate Credit. In late January, the IRS began issuing Letter 6475, Your Third Economic Impact Payment, to recipients of the third-round Economic Impact Payment. This letter will help Economic Impact Payment recipients determine if they are entitled to and should claim the Recovery Rebate Credit on their 2021 tax returns when they file in 2022.

    The American Rescue Plan Act of 2021, signed into law on March 11, 2021, authorized a third round of Economic Impact Payments and required them to be issued by Dec. 31, 2021. The IRS began issuing these payments on March 12, 2021 and continued through the end of the year.

    Eligible parents of children born in 2021 and families that added dependents in 2021 should claim the 2021 Recovery Rebate Credit; most other eligible people already received the full amount and won’t need to claim a credit on their tax return, The third-round Economic Impact Payment was an advance payment of the tax year 2021 Recovery Rebate Credit. The amount of the third-round Economic Impact Payment was based on the income and number of dependents listed on an individual’s 2019- or 2020-income tax return. The amount of the 2021 Recovery Rebate Credit is based on the income and number of dependents listed on an individual’s 2021 income tax return. Families and individuals in the following circumstances, among others, may not have received the full amount of their third-round Economic Impact Payment because their circumstances in 2021 were different than they were in 2020. These families and individuals may be eligible to receive more money by claiming the 2021 Recovery Rebate Credit on their 2021 income tax return:

    • Parents of a child born in 2021 who claim the child as a dependent on their 2021 income tax return may be eligible to receive a 2021 Recovery Rebate Credit of up to $1,400 for this child.

    o All eligible parents of qualifying children born in 2021 are also encouraged to claim the child tax credit—worth up to $3,600 per child born in 2021—on their 2021 income tax return.

    • Families who added a dependent – such as a parent, a nephew or niece, or a grandchild – on their 2021 income tax return who was not listed as a dependent on their 2020 income tax return may be eligible to receive a 2021 Recovery Rebate Credit of up to $1,400 for this dependent.
    • Single filers who had incomes above $80,000 in 2020 but less than this amount in 2021; married couples who filed a joint return and had incomes above $160,000 in 2020 but less than this amount in 2021; and head of household filers who had incomes above $120,000 in 2020 but less than this amount in 2021 may be eligible for a 2021 Recovery Rebate Credit of up to $1,400 per person.
    • Single filers who had incomes between $75,000 and $80,000 in 2020 but had lower incomes in 2021; married couples who filed a joint return and had incomes between $150,000 and $160,000 in 2020 but had lower incomes in 2021; and head of household filers who had incomes between $112,500 and $120,000 in 2020 but had lower incomes in 2021 may be eligible for a 2021 Recovery Rebate Credit.

    Individuals must claim the 2021 Recovery Rebate Credit on their 2021 income tax return in order to get this money; the IRS will not automatically calculate the 2021 Recovery Rebate Credit. The IRS began accepting 2021 income tax returns on January 24. Most other eligible people already received the full amount of their credit in advance and don’t need to include any information about this payment when they file their 2021 tax return. The IRS issued additional payments – called “Plus-Up” Payments – to individuals who initially received a third-round Economic Impact Payment based on information on their 2019 tax return and were eligible for a larger amount based on information on their 2020 tax return.

    Avoid processing delays when claiming the 2021 Recovery Rebate Credit

    The IRS strongly encourages people to have all the information they need to file an accurate return to avoid processing delays. If the return includes errors or is incomplete, it may require further review while the IRS corrects the error, which may slow the tax refund.

    To claim the 2021 Recovery Rebate Credit, individuals will need to know the total amount of their third-round Economic Impact Payment, including any Plus-Up Payments, they received.  People can view the total amount of their third-round Economic Impact Payments through their individual Online Account. The IRS will also send Letter 6475 through March to those who were issued third-round payments confirming the total amount for tax year 2021. For married individuals filing a joint return with their spouse, each spouse will need to log into their own Online Account or review their own letter for their portion of their couple’s total payment.

    The IRS urges recipients of stimulus payments to carefully review their tax return before filing. Having this payment information available while preparing the tax return will help individuals determine if they are eligible to claim the 2021 Recovery Rebate Credit for missing third-round stimulus payments. If eligible for the credit, they must file a 2021 tax return. Using the total amount of the third payments from the individual’s online account or Letter 6475 when filing a tax return can reduce errors and avoid delays in processing while the IRS corrects the tax return.

    The Get My Payment application will no longer be available as of Jan. 29, 2022, and individuals are encouraged to access Online Account to view their first-, second-, and third-round Economic Impact Payment amounts under the related tax year tab.

    File electronically, and choose direct deposit

    The amount of the 2021 Recovery Rebate Credit will reduce the amount of tax owed for 2021, or, if it’s more than the tax owed, it will be included as part of the individual’s 2021 tax refund. Individuals will receive their 2021 Recovery Rebate Credit included in their refund after the 2021 tax return is processed. The 2021 Recovery Rebate Credit will not be issued separately from the tax refund.

    To avoid processing delays, the IRS urges people to file a complete and accurate tax return. Filing electronically allows tax software to figure credits and deductions, including the 2021 Recovery Rebate Credit. The 2021 Recovery Rebate Credit Worksheet on Form 1040 and Form 1040-SR instructions can also help.

    The fastest and most secure way for eligible individuals to get their 2021 tax refund that will include their allowable 2021 Recovery Rebate Credit is by filing electronically and choosing direct deposit.

    Anyone with income of $73,000 or less, including those who don’t have a tax return filing requirement, can file their federal tax return electronically for free through the IRS Free File program. The fastest and most secure way to get a tax refund is to file electronically and have it direct deposited – contactless and free – into the individual’s financial account. Bank accounts, many prepaid debit cards, and several mobile apps can be used for direct deposit when taxpayers provide a routing and account number. IRS.gov/filing has details about IRS Free File, Free File Fillable Forms, free VITA or TCE tax preparation sites in communities or finding a trusted tax professional. Claim 2020 Recovery Rebate Credit for missing first- or second-round Economic Impact Payments

    All first- and second-round Economic Impact Payments have been issued. The first- and second-round Economic Impact Payments were an advance payment of tax year 2020 Recovery Rebate Credit. People who didn’t qualify for a first- and second- Economic Impact Payment or got less than the full amounts may be eligible to claim the 2020 Recovery Rebate Credit on a 2020 income tax return. Individuals will need to file a 2020 tax return if they have not filed yet or amend their 2020 income tax return if it’s already been processed.

    If the individual’s 2020 income tax return has not yet been fully processed, the individual should not file a second return. Some returns need special handling to correct errors or credit amounts, which can delay processing. The IRS is having to correct significantly more errors on 2020 tax returns than in previous years. If the IRS corrects the credit claimed on the return, the IRS will send a letter with an explanation.

    (Press Release )

  • “The Kashmir Files” at Harvard

    “The Kashmir Files” at Harvard

    BOSTON (TIP): Federation of Indian Association (FIA), New England and Indian American Community with several other partner organizations organizedtwo exclusivepre-release film Impact programs about ‘The Kashmir Files (TKF)’ on Wednesday, December 08, 202, oneat Harvard Club, Boston, MA in the afternoon, andthe other at the University of Massachusetts, Dartmouth, MA in the evening. This film has beenmade based on the real incidents of the exodus of Kashmiri Pandits in the 1990s that tell the stories of horrifying events to the world.

    All the invitees at the Harvard Club had a brief meet and greet program along with veggie wraps and various soft beverages, spending with Vivek Agnihotri (Film Director), Pallavi Joshi (actress), and Mallika (creative producer). Abhishek Singh (President of FIA, NE) and Jyoti Singh (Emcee of the program) welcomed all the invitees and set the tone of the discussion, and said they are hopeful the outcome of this discussion will help to prevail the Global Peace, Social Harmony, and humanity. Following a brief clip of the making of the film,Vivek Agnihotri briefed the audience about his motivation behind making this movie and his thoughts and experiences. Vivek said that his talks with some Kashmiri Pandits made him to uncover the truth behind the unreported/partially reported stories of the Indian history, and highlights of pains, sufferings, struggles, and trauma of Kashmiri Pandits.. Then,he realizedhypocritical policies adopted by the local and international top leaders and government agencies that raises questions about the principle of democracy, religion, politics, and humanity. It is an honest effort to uncover the truth, and present to the world.

    Prof. Bal Ram Singh moderated the panel discussion that comprised of Prof. Sanjay Kaul, Swati Chauhan,a student at Harvard Divinity School, Dr. Ramesh Kapoor, and Prof. Adam J. Sulkowski of Babson College. The panelists expressed their enlightening thoughts and said that such films, documentaries, and literature will definitely help the educators in teaching the younger generations about the factors and patterns of genocides, and how to addressissues of human rights, and world peace.In his concluding remarks, Vivek said that such issues would not be resolved by being either a leftist or rightist but by being in the middle as Lord Shiva’s third eye. It is an eye of wisdom, which provides us the ability to distinguish what is right and what is wrong and leads to onenessand true harmony in the world.  The packed Hall of influential intellectuals and local dignitaries applauded his speech. He as well answered all the questions raised by the audience in a brief interactive session.

    Pallavi talked about her experiences that came across during her research and requested everyone to watch the film on Friday at Regal Cinema, Marlborough, MA. She urged people to then share their thoughts with family members, friends, and on social media to encourage people to watch this movie which will be released theatrically worldwide on 26 January 2022, coinciding with India’s Republic Day. She asked people tobe aware of the real situations and support efforts that are working towards building Kashmir as a heaven on the earth again. Gaurav Dixit,Mukta Munjal thanked all the partner organizations, media, and dignitaries for their participation to the discussion.

    At UMass Dartmouth, Prof. Sukalyan Sengupta, Director of Center for Indic Studies, and Professor of Civil & Environmental Engineering Department led ‘The Kashmir Files” film screening event in the evening. He welcomed TKF film team, FIA, and Indian-American team members to the event and thanked a hall full of students, and eminent faculty members for their active support and participation.

    There are the Kashmiri Muslim and The Kashmiri Hindu views of the exodus but it seems like truth always lies somewhere in the middle. Kashmir is the birthplace of Shaivism and wisdom. It needs to be re-built by moving from ignorance towards knowledge and by following the middle way as symbolized by the third eye of Lord Shiva. We need to embrace the true principles of oneness and social harmony and world peace –said the impactful speaker Vivek Agnihotri.

    The faculty members namely, Prof. Amit Tandon, Prof. Uday Kant Jha, Prof. Jerry Solfvin, and twostudents- Shristi Bhat and Chinmay Kadrollimath,Raj Gupta (FIA, Executive Board-Director) shared their remarks on the exodus of Kashmiri Hindus and measures to stop such events from occurring in the future. Prof Uday Jha, Decision & Information Sciences, presented a brief historical perspective and factors that lead to the 1990’s Exodus of Kashmiri Hindus. In the Q& A session, Vivek answered all the curious questions of the students and faculty in a convincing and amicable manner.

    Pallavi shared her thoughts about the heartfelt interviews about the situations from the victims and their next-generation youths.Many students and other invitees also asked several questions to Pallavi and got her genuinely satisfactoryanswers.For the question, why a female tutor’s role and not a male tutor’s role was presented in the film, she said that not because females and children are vulnerable but it is a real character of the story.“You will definitely recognize that character when you watch this movie” – said Pallavi.

    One of the audiences said to the reporter that Vivek Ranjan Agnihotri’s film TKF has made both Bharat (India) andthe international arena proud of his creativity.

  • IRS issues standard mileage rates for 2022

    IRS issues standard mileage rates for 2022

    WASHINGTON D.C. (TIP): The Internal Revenue Service, December 17, issued the 2022 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes. Beginning on Jan. 1, 2022, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

     58.5 cents per mile driven for business use, up 2.5 cents from the rate for 2021,

    18 cents per mile driven for medical, or moving purposes for qualified active-duty members of the Armed Forces, up 2 cents from the rate for 2021 and 14 cents per mile driven in service of charitable organizations; the rate is set by statute and remains unchanged from 2021.

    The standard mileage rate for business use is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs. It is important to note that under the Tax Cuts and Jobs Act, taxpayers cannot claim a miscellaneous itemized deduction for unreimbursed employee travel expenses. Taxpayers also cannot claim a deduction for moving expenses, unless they are members of the Armed Forces on active duty moving under orders to a permanent change of station. For more details see Moving Expenses for Members of the Armed Forces.

    Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using 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.

    Notice 22-03, contains the optional 2022 standard mileage rates, as well as the maximum automobile cost used to calculate the allowance under a fixed and variable rate (FAVR) plan. In addition, the notice provides the maximum fair market value of employer-provided automobiles first made available to employees for personal use in calendar year 2022 for which employers may use the fleet-average valuation rule in or the vehicle cents-per-mile valuation rule.

  • IRS makes Tax Exempt Organization Search primary source to get exempt organization data

    IRS makes Tax Exempt Organization Search primary source to get exempt organization data

    WASHINGTON D.C. (TIP): The Internal Revenue Service announced, December 16, that the publicly available data it provides on electronically filed Forms 990 in a machine-readable format will be available solely on the Tax Exempt Organization Search webpage.

    Beginning Dec. 31, 2021, the IRS will no longer update the Form 990 Series data on Amazon Web Services. This change is to provide access to public data for organizations with tax-exempt status in one location on IRS.gov on the Charities and Nonprofits webpage. The Tax Exempt Organization Search Bulk Data Downloads webpage has multiple data sets of information about organizations’ tax-exempt status and filings with instruction on how to download.

    The Form 990 series data set includes XML and individual PDF files of Form 990, Return of Organization Exempt from Income Tax; Form 990-EZ, Short Form Return of Organization Exempt from Income Tax; and Form 990-PF, Return of Private Foundation and related schedules. The IRS redacts personally identifiable tax-identification numbers to prevent the data’s misuse.

    The Form 990 series returns are the primary tool for IRS to gather information about tax-exempt organizations and promote compliance with tax-law requirements. Organizations also use the Form 990 to share information with the public about their programs. Additionally, most states rely on the Form 990 to perform charitable and other regulatory oversight and to satisfy state income tax filing requirements for organizations claiming exemption from state income tax.

    A tax-exempt organization must file an annual information return or notice with the IRS unless an exception applies. Annual information returns include Form 990, Form 990-EZ and Form 990-PF. Form 990-N (e-Postcard) is an annual notice. For updates on TEOS and other issues related to charities and nonprofits, please subscribe to the Exempt Organization Update newsletter.

  • Families will soon receive their December advance Child Tax Credit payment; those not receiving payments may claim any missed payments on the upcoming 2021 tax return

    Families will soon receive their December advance Child Tax Credit payment; those not receiving payments may claim any missed payments on the upcoming 2021 tax return

    WASHINGTON D.C. (TIP): The Internal Revenue Service and the Treasury Department announced, December 15, that millions of American families will soon receive their final advance Child Tax Credit (CTC) payment for the month of December. Eligible families who did not receive advance payments can claim the Child Tax Credit on their 2021 federal tax return to receive missed payments and the other half of the credit.

    This final batch of advance monthly payments for 2021, totaling about $16 billion, will reach more than 36 million families across the country. Most payments are being made by direct deposit.

    Under the American Rescue Plan, eligible families have received more than 200 million payments totaling more than $93 billion. Most eligible families received payments dated July 15, Aug. 13, Sept. 15, Oct. 15, Nov. 15 and Dec 15. For eligible families, each payment is up to $300 per month for each child under age 6 and up to $250 per month for each child ages 6 through 17.

    Here are more details on the December payments:

    Families will see the direct deposit payments in their accounts starting Dec. 15. Like the prior payments, the vast majority of families will receive them by direct deposit.

    For those receiving payments by paper check, be sure to allow extra time, through the end of December, for delivery by mail.

    Payments are going to eligible families who filed a 2019 or 2020 federal income tax return. Returns processed by Dec. 1 are reflected in these payments. This includes people who don’t typically file a return but either during 2020 successfully filed a return to register for Economic Impact Payments using the IRS Non-Filers tool on IRS.gov, or in 2021 successfully filed a return by using the Non-filer Sign-up Tool for advance CTC.

    Families who did not get a July, August, September, October or November payment and are getting their first monthly payment this month will still receive their total advance payment amount for the year (which is half of their total Child Tax Credit). This means that the total advance payment amount will be made in one December payment.

    Claim the full Child Tax Credit on the 2021 tax return

    Eligible families who did not receive any advance Child Tax Credit payments can claim the full amount of the Child Tax Credit on their 2021 federal tax return, filed in 2022. This includes families who don’t normally need to file a return.

    Families who received advance payments will need to file a 2021 tax return and compare the advance Child Tax Credit payments they received in 2021 with the amount of the Child Tax Credit they can properly claim on their 2021 tax return.

    To help taxpayers reconcile the advance payments, the IRS will send Letter 6419 in January 2022 with the total amount of advance Child Tax Credit payments taxpayers received in 2021 and the number of qualifying children used to calculate the advance payments. People should keep this and any other IRS letters about advance Child Tax Credit payments with their tax records.

    See Reconciling Your Advance Child Tax Credit Payments on Your 2021 Tax Return for more information. Links to online tools, answers to frequently asked questions and other helpful resources are available on the IRS’s special advance CTC 2021 page.

  • IRS highlights employer tax responsibilities and benefits during Small Business Week

    IRS highlights employer tax responsibilities and benefits during Small Business Week

    WASHINGTON (TIP): In support of National Small Business Week, the Internal Revenue Service will issue numerous online materials that focus on getting small business owners the information they need to comply with filing and paying requirements.

    The IRS also reminds employers of the tax benefits available to them.

    Here are some of the covered topics:

    Employer Responsibilities

    Employee vs. Independent Contractor

    Work Opportunity Tax Credit

    Employment Tax Compliance

    Expanded Tax Benefits

    During Small Business Week, the IRS also encourages employers to help get the word out about the advanced payments of the Child Tax Credit. Employers have direct access to their employees, who may receive this credit. More information on the Advanced Child Tax Credit is available on IRS.gov. The website has tools employers can use to help spread the word.

    Below are some helpful resources for small businesses and the self-employed:

    “A Closer Look” at Celebrating Resilience and Renewal During National Small Business Week.

    The Small Business and Self-Employed Tax Center provides a variety of resources, forms and tools in Spanish, Chinese, Korean, Vietnamese, Russian and Haitian Creole. The Center includes a Self-Employed Individuals Tax Center, information on independent contractors vs. employees, filing and paying your business taxes and more.

    The Gig Economy Tax Center is a resource for people who earn income providing on-demand work, services or goods.

    The Online Learning and Educational Products page has tools to help business owners learn at their own pace such as the Small Business Virtual Tax Workshop.

    The IRS YouTube Video Channel has videos for small businesses on the Small Business playlist.

    E-News for Small Businesses is a free, electronic mail service that offers tax information for small business owners and self-employed individuals including reminders, tips and special announcements.

     

  • Child Tax Credit: New update address feature available with IRS online portal; make other changes by Aug. 30 for September payment

    Child Tax Credit: New update address feature available with IRS online portal; make other changes by Aug. 30 for September payment

    WASHINGTON(TIP): The Internal Revenue Service has launched a new feature allowing any family receiving monthly Child Tax Credit payments to quickly and easily update their mailing address using the Child Tax Credit Update Portal, found exclusively on IRS.gov. This feature will help any family that chooses to receive their payment by paper check avoid mailing delays or even having a check returned as undeliverable.

    Any family can easily have their September check and all future checks sent to their new address by using the portal to make an address change request. To have the change take effect in September, people need to complete the request before midnight Eastern Time on Monday, Aug. 30. Families can still make changes after that date, but their request will not be effective until the next scheduled monthly payment.

    If you change your mailing address using the Child Tax Credit Update Portal, the IRS will use this updated address for all future IRS correspondence so the address change feature can also be helpful to taxpayers that are receiving payments by direct deposit. For example, the IRS will mail a year-end summary statement (Letter 6419) to all taxpayers who have received advance Child Tax Credit payments during 2021, and having a current address on file with the IRS will ensure prompt delivery of this statement.

    Families will need Letter 6419 to quickly and accurately fill out their 2021 federal income tax return next year. This is important because, for most families, the advance payments they are receiving during 2021 cover only half of the total credit. They will claim the remaining portion on their 2021 tax return.

    The address change feature joins a growing set of services available through the Child Tax Credit Update Portal. Available only on IRS.gov, the portal already allows families to verify their eligibility for the payments and then, if they choose to:

    Switch from receiving a paper check to direct deposit;

    Change the account where their payment is direct deposited; or

    Stop monthly payments for the rest of 2021.

    Any of these changes made before midnight ET on Aug. 30, will apply to the Sept. 15 payment and all subsequent monthly payments, scheduled for Oct. 15, Nov. 15, and Dec. 15.

    Future enhancements are planned for the Child Tax Credit Portal.

    Later this year, families will also be able to use the Update Portal tool to:

    Add or remove children in most situations;

    Report a change in marital status; or

    Report a significant change in income.

    Latest information for the Child Tax Credit payments on IRS.gov

    The IRS has created a special Advance Child Tax Credit 2021 page designed to provide the most up-to-date information about the credit and the advance payments. It’s at IRS.gov/childtaxcredit2021.

    The web page now features an updated set of frequently asked questions and a new user guide for the Child Tax Credit Update Portal (Publication 5549). It also provides direct links to the portal, as well as two other online tools– the Non-Filer Sign Up Tool and the Child Tax Credit Eligibility Assistant — and other useful resources.

    (Press Release)

  • 2 million more Economic Impact Payments disbursed under the American Rescue Plan; total reaches approximately 161 million as payments continue

    2 million more Economic Impact Payments disbursed under the American Rescue Plan; total reaches approximately 161 million as payments continue

    WASHINGTON(TIP): The Internal Revenue Service, the U.S. Department of the Treasury, and the Bureau of the Fiscal Service announced, April 22, they are disbursing nearly 2 million payments in the sixth batch of Economic Impact Payments from the American Rescue Plan. Today’s announcement brings the total disbursed so far to approximately 161 million payments, with a total value of more than $379 billion, since these payments began rolling out to Americans in batches as announced on March 12. The sixth batch of payments began processing on Friday, April 16, with an official payment date of April 21, with some people receiving direct payments in their accounts earlier as provisional or pending deposits. Here is additional information on this batch of payments:

    In total, this batch includes nearly 2 million payments with a value of nearly $3.4 billion. Nearly 700,000 payments, with a value of more than $1.3 billion, went to eligible individuals for whom the IRS previously did not have information to issue an Economic Impact Payment but who recently filed a tax return. This batch also includes additional ongoing supplemental payments for people who earlier this year received payments based on their 2019 tax returns but are eligible for a new or larger payment based on their recently processed 2020 tax returns. This batch included nearly 700,000 of these “plus-up” payments, with a value of nearly $1.2 billion. Another 600,000 payments went to Social Security beneficiaries and Supplemental Security Income recipients, including those with foreign addresses. Overall, this sixth batch of payments contains about 900,000 direct deposit payments (with a total value of $1.5 billion) and nearly 1.1 million paper check payments (with a total value of nearly $1.8 billion). Additional information is available on the first five batches of Economic Impact Payments from the American Rescue Plan, which began processing on April 9, April 2, March 26, March 19 and March 12. The IRS will continue to make Economic Impact Payments on a weekly basis. Ongoing payments will be sent to eligible individuals for whom the IRS previously did not have information to issue a payment but who recently filed a tax return, as well to people who qualify for “plus-up” payments.

    Special reminder for those who don’t normally file a tax return

    Although payments are automatic for most people, the IRS continues to urge people who don’t normally file a tax return and haven’t received Economic Impact Payments to file a 2020 tax return to get all the benefits they’re entitled to under the law, including tax credits such as the 2020 Recovery Rebate Credit, the Child Tax Credit, and the Earned Income Tax Credit.  Filing a 2020 tax return will also assist the IRS in determining whether someone is eligible for an advance payment of the 2021 Child Tax Credit, which will begin to be disbursed this summer. For example, some federal benefits recipients may need to file a 2020 tax return – even if they don’t usually file – to provide information the IRS needs to send payments for a qualifying dependent. Eligible individuals in this group should file a 2020 tax return as quickly as possible to be considered for an additional payment for their qualifying dependents.

    People who don’t normally file a tax return and don’t receive federal benefits may qualify for these Economic Impact Payments. This includes those experiencing homelessness, the rural poor and others. Individuals who didn’t get a first or second round Economic Impact Payment or got less than the full amounts may be eligible for the 2020 Recovery Rebate Credit, but they’ll need to file a 2020 tax return. See the special section on IRS.gov: Claiming the 2020 Recovery Rebate Credit if you aren’t required to file a tax return.

    Free tax return preparation is available for qualifying people. The IRS reminds taxpayers that the income levels in this new round of Economic Impact Payments have changed. This means that some people won’t be eligible for the third payment even if they received a first or second Economic Impact Payment or claimed a 2020 Recovery Rebate Credit. Payments will begin to be reduced for individuals making $75,000 or above in Adjusted Gross Income ($150,000 for married filing jointly). The payments end at $80,000 for individuals ($160,000 for married filing jointly); people with Adjusted Gross Incomes above these levels are ineligible for a payment.

    Individuals can check the Get My Payment tool on IRS. gov to see the payment status of these payments. Additional information on Economic Impact Payments is available on IRS.gov.

  • Treasury Department and IRS provide safe harbor for small businesses to claim deductions relating to first-round Paycheck Protection Program loans

    Treasury Department and IRS provide safe harbor for small businesses to claim deductions relating to first-round Paycheck Protection Program loans

    WASHINGTON (TIP): The Treasury Department and the Internal Revenue Service, on April 22, issued Revenue Procedure 2021-20 for certain businesses that received first-round Paycheck Protection Program (PPP) loans but did not deduct any of the original eligible expenses because they relied on guidance issued before the enactment of tax relief legislation in December of 2020. Under prior guidance, businesses that received PPP loans to cover payroll costs, interest on covered mortgage obligations, covered rent obligation payments, and covered utility payments could not deduct corresponding expenses. With the Dec. 27, 2020, enactment of the Consolidated Appropriations Act, 2021, businesses now may claim these deductions even though they received PPP loans to cover original eligible expenses. These businesses can use the safe harbor provided by this guidance to deduct those expenses on the return for the immediately subsequent year. More information on COVID-19 related tax relief for business can be found on IRS.gov

  • IRS, Treasury disburse more Economic Impact Payments under the American Rescue Plan; total tops 130 million with more to come

    IRS, Treasury disburse more Economic Impact Payments under the American Rescue Plan; total tops 130 million with more to come

    WASHINGTON (TIP): The Internal Revenue Service, the U.S. Department of the Treasury and the Bureau of the Fiscal Service announced, April 1, they are disbursing several million more payments in the third batch of Economic Impact Payments from the American Rescue Plan. This brings the total disbursed so far to more than 130 million payments worth approximately $335 billion.

    As announced on March 12, Economic Impact Payments continue to roll out in batches to millions of Americans. The third batch of payments began processing on Friday, March 26, with an official payment date of March 31, with some people receiving direct payments in their accounts earlier as provisional or pending deposits. Here is additional information on this batch of payments:

    This batch includes the first of ongoing supplemental payments for people who earlier in March received payments based on their 2019 tax returns but are eligible for a new or larger payment based on their recently processed 2020 tax returns. These “plus-up” payments could include a situation where a person’s income dropped in 2020 compared to 2019, or a person had a new child or dependent on their 2020 tax return, and other situations. The payments announced today also include payments for people for whom the IRS previously did not have information to issue a payment but who recently filed a tax return and qualify for an Economic Impact Payment.  Payments to this group — and the “plus-up” payments noted above — will continue on a weekly basis going forward, as the IRS continues processing tax returns from 2020 and 2019.

    In total, this third batch includes more than 4 million payments, with a total value of more than $10 billion.

    This batch of payments contains more than 2 million direct deposit payments (with a total value of more than $5 billion) and approximately 2 million paper check payments (with a total value of nearly $5 billion).

    For the first two batches of payments (which began processing on March 12 and March 19), payments were primarily sent to eligible taxpayers who filed 2019 or 2020 returns. People who don’t typically file a return but who successfully used the Non-Filers tool on IRS.gov last year were also sent payments in these first two batches, either as a direct deposit or by paper check or an EIP Card, a prepaid debit card.

    Starting Friday, a large set of payments will begin going to Social Security and other federal beneficiaries who didn’t file a 2020 or 2019 tax return and didn’t use the Non-Filers tool last year. These payments will go to Social Security retirement, survivor or disability (SSDI), Supplemental Security Income (SSI), and Railroad Retirement Board (RRB) beneficiaries. As announced previously, these payments will begin to be issued this weekend, with the projection that the majority of these payments will be sent electronically and received on April 7.

    No action is needed by most people to obtain this round of Economic Impact Payments. People can check the Get My Payment tool on IRS.gov on to see if their payment has been scheduled. The IRS notes that the Get My Payment tool on IRS.gov will not be updated until the weekend of April 3-4 with information for Social Security and other federal beneficiaries expecting payments next week.

    The IRS continues to review data received for Veterans Affairs (VA) benefit recipients and expects to determine a payment date and provide more details soon. Currently, the IRS estimates that Economic Impact Payments for VA beneficiaries who do not regularly file tax returns could be disbursed by mid-April. VA beneficiary payment information will be available in the Get My Payment tool at a future date.

    Special reminder for those who don’t normally file a tax return

    Some federal benefits recipients may need to file a 2020 tax return, even if they don’t usually file, to provide information the IRS needs to send payments for any qualified dependent. Eligible individuals in this group should file a 2020 tax return to be considered for an additional payment for their qualified dependent as quickly as possible. People who don’t normally file a tax return and don’t receive federal benefits may qualify for these Economic Impact Payments. This includes those experiencing homelessness, the rural poor, and others. For those eligible individuals who didn’t get a first or second Economic Impact Payment or got less than the full amounts, they may be eligible for the 2020 Recovery Rebate Credit, but they’ll need to file a 2020 tax return. See the special section on IRS.gov: Claiming the 2020 Recovery Rebate Credit if you aren’t required to file a tax return.

    Free tax return preparation is available for qualifying people.

    The IRS reminds taxpayers that the income levels in this new round of Economic Impact Payments have changed. This means that some people won’t be eligible for the third payment even if they received a first or second Economic Impact Payment or claimed a 2020 Recovery Rebate Credit. Payments will begin to be reduced for individuals making $75,000 or above in Adjusted Gross Income ($150,000 for married filing jointly). The payments end at $80,000 for individuals ($160,000 for married filing jointly); people with Adjusted Gross Incomes above these levels are ineligible for a payment.

    Individuals can check the Get My Payment tool on IRS.gov to see the payment status of these payments. Additional information on Economic Impact Payments is available on IRS.gov.

  • IRS Pushes Tax Deadline Back by One Month

    IRS Pushes Tax Deadline Back by One Month

    Filers will have until May 17, the agency said Wednesday, March 17.

    WASHINGTON (TIP): The Internal Revenue Service will give Americans extra time to file their taxes as a result of the pandemic. Instead of the usual April 15 deadline, filers will instead have until May 17, the agency said Wednesday, an extension that will ease the burden on filers dealing with the economic upheaval caused by the coronavirus, which has put millions out of work or caused their hours to be cut.

    “This continues to be a tough time for many people, and the IRS wants to continue to do everything possible to help taxpayers navigate the unusual circumstances related to the pandemic,” said Chuck Rettig, the IRS commissioner.

    The one-month delay is not as much extra time as the IRS offered last year, when the filing deadline was pushed to July 15. But it should make it easier for taxpayers to get a handle on their finances — as well as tax changes that took effect just this month with the signing of the American Rescue Plan.

    The new law made the first $10,200 of unemployment benefits received in 2020 tax-free for people with incomes of less than $150,000, a significant change for many whose jobs were affected by the pandemic. The IRS said last week that it would provide a worksheet for paper filers and coordinate with tax-software companies. The agency also asked those who were eligible for the tax break but had already filed their 2020 returns not to file an amended return until it had issued additional guidance.

    But Mr. Rettig said taxpayers should not unnecessarily delay filing, especially if they will be receiving money back.

    “Filing electronically with direct deposit is the quickest way to get refunds,” he said. (Taxpayers who file electronically can generally expect to receive any refund within 21 days.)

    The IRS emphasized that the extra time is only for federal returns, not state returns, so taxpayers should check with their state tax agencies about any deadline changes. It also does not apply to estimated tax payments that are due on April 15, which are still due on that day.

    Filing quickly also can benefit people whose 2020 income makes them newly eligible for a stimulus payment, or eligible for a larger one. (The latest stimulus bill includes a provision for the Treasury Department to make supplemental payments by September; if you don’t get one by then, you should be able to claim what you’re owed when you file your 2021 taxes.)

    (Source: NY Times)

  • The IRS is behind in processing nearly 7 million tax returns, slowing refunds as it implements new stimulus

    The IRS is behind in processing nearly 7 million tax returns, slowing refunds as it implements new stimulus

    • IRS commissioner says he hopes to clear tax refund backlog by summer
    • Lawmakers told him Americans need the refunds as a lifeline during the pandemic.

    WASHINGTON (TIP): Nearly 7 million tax filers are in limbo and facing substantial delays in getting refunds so far this tax filing season, as the Internal Revenue Service struggles to keep up with the demands of issuing stimulus checks and implementing myriad tax code changes from coronavirus relief packages, including the one President Biden signed this week. There are 6.7 million returns that have not yet been processed, more than three times the number in the same period last year, when fewer than 2 million returns faced delayed processing, IRS data shows.

    The delays are largely a result of a year’s worth of extraordinary stimulus measures that have created more complicated tax returns for millions of Americans. The IRS was already straining to adjust after the December stimulus package. The newest package, the American Rescue Plan, adds even more tasks for the agency, including sending out another round of one-time payments, making changes to tax rules to help unemployed workers and paying out a new child tax benefit. Many Americans who did not receive the correct stimulus payments in January or last year are filing for additional money now. And some low-income filers are newly eligible for more tax credits than usual. The IRS is having to manually review a lot of these returns, a slow process that is delaying refunds for millions of low-income families, after the agency has faced a decade’s worth of budget cuts and staffing losses.

    More than 100 people still waiting for the IRS to process their returns shared their stories with The Washington Post. Most filed electronically on Feb. 12, when the IRS opened tax filing season. They were eager to get their refunds and to update their information with the IRS ahead of the $1,400 stimulus payments going out. But a month later, many of these early filers are still waiting for their returns to be processed — and their refunds to be deposited.

    “I’m supposed to get a $5,600 refund. I absolutely need that money, and the IRS just won’t give me any answers,” said Frances Johnson, a single mother in Burlington, Wash., who filed on Feb. 12 and needs the money to repair her car. “When I call, they say I will have to wait until the end of April.”

    The main two issues to emerge so far this tax filing season are a large number of returns being sent for manual review and the malfunctioning of the popular “Where’s My Refund?” tool for weeks. The tool was fixed last weekend, the IRS confirmed, but the processing delays persist.

    National Taxpayer Advocate Erin Collins has been urging the IRS to let people know why returns are delayed. She is also concerned that the processing delays could get even worse if millions of people who already filed their taxes have to file amended returns to benefit from the changes Congress just enacted.

    For example, unemployed workers could see tax breaks, because Congress agreed to make the first $10,200 of unemployment benefits received from the government in 2020 nontaxable.

    The backlog is severe for any tax return requiring a manual review by an experienced IRS staffer. Amended returns typically require a manual review, and many of the 6.7 million returns that have yet to be processed are also sitting in line for a manual review, according to Collins.

    The IRS said that 36 million refunds have gone out so far and that the agency is moving as fast as it can to get stimulus payments out in the coming days, all while processing more returns.

    “While the IRS issues most tax refunds within 21 days of the filing season start, it’s possible some refunds may take longer,” said IRS spokesman Robert Marvin. “Many factors can affect the timing of your refund after we receive your return. Some tax returns take longer to process than others. For example, returns with an error, incomplete information or those affected by theft or fraud may take longer to process.”

    Marvin said the IRS would send taxpayers letters if more information is needed to process a return.

    Jacob White is one of the frustrated Americans desperate for a refund to arrive, so that he can pay March rent. He and his girlfriend both filed their tax returns on the same day: Feb. 12. Her refund arrived two weeks later. He has not seen his, and the IRS reports that it is still “processing.”

    An IRS call center agent told White on Wednesday that “over 7 million returns were sent to the Error Resolution System to buy time.” “It’s just the wrong time for all of this. People need the money,” White said. “My rent and my car payment are due next week, and the electric.”

    The Error Resolution System is the group involved in the manual review of returns. Most years, it deals mainly with returns that are flagged as potentially fraudulent, but this year millions of returns claiming stimulus money or involving the earned-income tax credit or the child tax credit have also gone to the error department. Most of these filers are low-income families who lost a job or who had a new baby in 2020, and should have received stimulus checks based on those events but did not.

    “We had a 2020 baby, and we also had our income drop in 2020, so we claimed that we had missed out on some stimulus,” said Caitlyn Primiano, who lives in Syracuse, N.Y., with her husband and five children. “The IRS is telling everyone like me that their returns are in the ‘review and errors’ department and to expect 10 weeks.”

    The other problem is that Congress said low-income tax filers could use either 2019 or 2020 income to qualify for the highest possible tax credits for children. IRS systems have struggled to handle two different years of income qualification.

    Current and former IRS staffers say it was inevitable that something would go awry since there are not enough employees to handle the workload, especially with Congress adding more tasks.

    The IRS had its budget slashed by 20 percent from 2010 to 2019, and staffing is down by 23 percent — or more than 22,000 positions, according to the Government Accountability Office.

    “At some point when you take so much money out of an agency, it will do less with less, and that’s showing up across the IRS — from the time it takes to process a return to how many calls it can answer to lower enforcement,” said Chye-Ching Huang, executive director of the Tax Law Center at the New York University School of Law.

    The IRS “has gone from being solely a tax administration system to also implementing social programs,” Collins said in an interview. “The IRS will get it done, but at what cost?”

    Collins said the consequences for the nation’s tax filers include slower processing of returns and less help from taxpayer assistance services, since fewer staffers are available to take calls and look at returns. Most IRS employees are already working mandatory overtime, she noted. While the American Rescue Plan provides about $1.9 billion in additional funding for the IRS, it takes time to hire and train employees to work with sensitive data.

    The mounting backlog at the IRS — and the lingering burdens created by the coronavirus — have led some Democratic lawmakers to call on the agency to extend the filing deadline beyond April 15, as it did last year.

    Rep. Bill Pascrell Jr. (D-N.J.) even asked the IRS formally in a letter last week to push the tax filing deadline to October. But the lawmaker, who chairs an oversight panel with the House Ways and Means Committee, said Friday that he had not heard back, setting the stage for a tense clash between lawmakers and the agency when IRS Commissioner Charles Rettig testifies at a hearing next week.

    “If they don’t answer me by then, I don’t think that’s going to be a pretty discussion,” Pascrell said, adding that the agency generally “has to do a better job.”

    Sen. Ron Wyden (D-Ore.), the chairman of Senate Finance Committee, pledged that his panel would provide vigorous oversight of the IRS as it implements the new stimulus law, starting with an expected hearing featuring Rettig in early April.

    Wyden said lawmakers seek a “concrete work plan” from the agency as it embarks on a process to implement vast changes to the tax code that would provide new aid to jobless workers and families with children.

    “We are making this clear to the IRS, we want this done as soon as possible,” he said.

    Yet millions of Americans are still waiting on their refunds.

    “It’s just so frustrating,” said Jason Weiler, who works in the film industry in Los Angeles and was counting on money from the refund and the latest stimulus to plug a hole when his latest gig ends shortly. “The IRS told us to get these in, but what do we have to show for it?”

    (Source: Washington Post)

  • Tax season starts February 12 and closes April 15

    Tax season starts February 12 and closes April 15

    IRS has been making all efforts to provide necessary information on tax matters- how to file returns, how to pay tax, how to claim tax rebates, etc.  It has also been cautioning taxpayers from time to time to protect themselves from scams and scammers.

    Here are some advisories from IRS. These will make your taxpaying experience pleasurable.

    Get ready for tax season using IRS Online Account

    WASHINGTON (TIP): The Internal Revenue Service, on February 11, reminded taxpayers they can securely access their IRS account information through their individual online account.

    The IRS regularly adds features to online account. For example, people can now check the amounts of their Economic Impact Payments (EIPs) to help them accurately calculate any Recovery Rebate Credit they may be eligible for on their 2020 tax return. The EIP amounts can be found on the Tax Records tab. Amounts will show as “Economic Impact Payment” for the first payment and “Additional Economic Impact Payment” for the second payment. For married filing joint individuals, each spouse will need to sign into their own account to retrieve their portion of the payments. For more information regarding the credit, see Recovery Rebate Credit. Additionally, taxpayers can view:

    The amount they owe, updated for the current calendar day

    Their balance details by year

    Their payment history and any scheduled or pending payments

    Key information from their most recent tax return

    Details about their payment plan, if they have one

    Digital copies of select notices or letters from the IRS (under the Message Center tab)

    They can also:

    Make a payment online

    See payment plan options and request a plan via Online Payment Agreement

    Access their tax records via Get Transcript

    Later in 2021, taxpayers will be able to digitally sign certain authorization forms, such as a power of attorney, initiated by their tax professional.

    Here’s how to get started for new users:

     Select View Your Account at IRS.gov homepage

    Select the “Create or View Your Account” button

    Click “Create Account”

    Pass “Secure Access” authentication. This is a rigorous process to verify that the taxpayers are who they say they are. They must be able to authenticate their identity to continue. See www.irs.gov/secureaccess for details.

    Create a profile.

    Once the initial authentication process is complete, returning users can use the same username and password to access other IRS online services such as Get Transcript and Get An Identity Protection PIN (IP PIN) (if applicable).

    All password-protected online IRS tools for taxpayers are protected by multi-factor authentication, offering extra security precautions.

    Avoid pandemic paper delays: Use e-file with direct deposit for faster refunds as IRS prepares to open 2020 filing season

    WASHINGTON (TIP): With filing season opening on Feb. 12, the Internal Revenue Service urged taxpayers to take some simple steps to help ensure they file accurate tax returns and speed their tax refunds to avoid a variety of pandemic-related issues. Although every year the IRS encourages taxpayers to e-file their returns and use direct deposit to receive refunds, to those taxpayers who have previously not used e-file, the IRS emphasizes using it this year to avoid paper-related processing delays. Taxpayers can file electronically by using a tax professional, IRS Free File or other commercial tax preparation software. The IRS cautioned paper-filed tax returns and paper checks will take even longer this year due to a variety of reasons.

    Taxpayers have until Thursday, April 15, 2021, to file their 2020 tax return and pay any tax owed. The IRS expects to receive more than 160 million individual tax returns this year with nine out of 10 returns filed electronically. At least eight out of 10 taxpayers get their refunds by using direct deposit. “The pandemic has created a variety of tax law changes and has created some unique circumstances for this filing season,” said IRS Commissioner Chuck Rettig. “To avoid issues, the IRS urges taxpayers to take some simple steps to help ensure they get their refund as quickly as possible, starting with filing electronically and using direct deposit. “Following months of hard work, we are ready to start this year’s tax season,” Rettig added. “Getting to this point is always a year-round effort for the IRS and the nation’s tax community. Doing it in a continuing COVID-19 environment while simultaneously delivering stimulus payments for the nation is an unprecedented accomplishment by IRS employees. I also want to thank all our tax partners and tax professionals for their hard work that makes tax time smoother for the nation. All of us stand ready to serve America’s taxpayers during this important filing season.” Wage and Investment Commissioner and Chief Taxpayer Experience Officer Ken Corbin provides an in-depth perspective on how the IRS is preparing for a successful filing season in his A Closer Look column.

    Be tax ready: Review pandemic-related changes

    Last year’s sweeping set of tax changes not only affected individuals and their families but may also affect the tax return they’re filing this year. A new IRS Fact Sheet explains what taxpayers need to know to file a complete and accurate tax return. The IRS recognizes that filing this year may be challenging for some taxpayers and it’s important to understand how to claim credits and deductions, get a refund timely and meet all tax responsibilities.

    Recovery Rebate Credit helps people still eligible for Economic Impact Payments

    For those who may be eligible for stimulus payments, they should carefully review the guidelines for the Recovery Rebate Credit. Most people received Economic Impact Payments automatically, and anyone who received the maximum amount does not need to include any information about their payments when they file. However, those who didn’t receive a payment or only received a partial payment may be eligible to claim the Recovery Rebate Credit when they file their 2020 tax return. Tax preparation software, including IRS Free File, will help taxpayers figure the amount.

    New language preferences to help taxpayers

    Additionally, this year for the first time, Forms 1040 and 1040-SR are available in Spanish, and the IRS has a new form allowing taxpayers to request that they receive information from the IRS in their preferred language. The Schedule LEP, Request for Change in Language Preference, will allow taxpayers to request information in some 20 different languages besides English.

    The IRS also wants to remind taxpayers of other important changes that could impact their tax return this year.

    Remember to factor in retirement plan distributions

    Some taxpayers found it necessary to take coronavirus-related early distributions from 401(k) plans and traditional IRAs in 2020. Under the CARES Act, those distributions – up to $100,000 – are not subject to the 10% additional tax that otherwise generally applies to distributions made before an individual reaches age 59 ½. In addition, a coronavirus-related distribution can be included in income in equal installments over a three-year period, and an individual has three years to repay a coronavirus-related distribution to a plan or IRA and undo the tax consequences of the distribution. Taxpayers should also remember that they can make contributions to traditional IRAs until April 15, 2021, and still deduct that amount on their 2020 tax return, if eligible.

    New for 2020: non-itemizers can deduct $300 for charitable cash contributions

    Previously, charitable contributions could only be deducted if taxpayers itemized their deductions.

    However, with the CARES act, taxpayers who don’t itemize deductions may take a charitable deduction of up to $300 for cash contributions made in 2020 to qualifying organizations. For the purposes of this deduction, qualifying organizations are those that are religious, charitable, educational, scientific or literary in purpose.

    Now more than ever, e-file is best

    Now more than ever, the safest and best way to file a complete and accurate tax return and get a refund is to file electronically and use direct deposit. Taxpayers can visit IRS.gov/filing for more details about IRS Free File, Free File Fillable Forms and Free tax preparation sites. E-filing is also available through a trusted tax professional. Free File is a great option for people who are only filing a tax return to claim the Recovery Rebate Credit, either because they didn’t receive an Economic Impact Payment or did not receive the full amount.

    The fastest way to get a refund is to file electronically and use direct deposit. Most refunds are issued in less than 21 days, but some refunds may take longer for a variety of reasons. Taxpayers can track their refund using “Where’s My Refund?” on IRS.gov or by downloading the IRS2Go mobile app where they’ll get a personalized refund date as soon as 24 hours after the tax return is electronically submitted. Most early Earned Income Tax Credit/Additional Child Tax Credit filers should see an update to “Where’s My Refund?” by Feb. 22. The IRS cannot answer refund status inquiries unless it has been 21 days since the return was electronically filed.

    IRS tax help is available 24 hours a day on IRS.gov, where people can find answers to tax questions and resolve tax issues online from the safety of their home. The Let Us Help You page helps answer most tax questions, and the IRS Services Guide PDF links to other important IRS services.

    Double-check for missing or incorrect Forms W-2, 1099 before filing taxes

    WASHINGTON (TIP):  With some areas seeing mail delays, the Internal Revenue Service reminds taxpayers to double-check to make sure they have all of their tax documents, including Forms W-2 and 1099, before filing a tax return.

    The IRS reminds taxpayers that many of these forms may be available online. When other options aren’t available, taxpayers who haven’t received a W-2 or Form 1099 should contact the employer, payer or issuing agency directly to request the missing documents before filing their 2020 federal tax return. This also applies for those who received an incorrect W-2 or Form 1099.

    Those who don’t get a response, are unable to reach the employer/payer/issuing agency or cannot otherwise get copies or corrected copies of their Forms W-2 or 1099 must still file their tax return on time by the April 15 deadline (or October 15 if requesting an automatic extension). They may need to use Form 4852, Substitute for Form W-2, Wage and Tax Statement, or Form 1099-R, Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. to avoid filing an incomplete or amended return.

    If the taxpayer doesn’t receive the missing or corrected form in time to file their tax return by the April deadline, they may estimate the wages or payments made to them, as well as any taxes withheld. Use Form 4852 to report this information on their federal tax return.

    If the taxpayer receives the missing or corrected Form W-2 or Form 1099-R after filing their return and the information differs from their previous estimate, they must file Form 1040-X, Amended U.S. Individual Income Tax Return. For additional information on filing an amended return, see Topic No. 308 and Should I File an Amended Return?

    Taxpayers should allow enough time for tax records to arrive in the mail before filing their 2020 tax return. In a normal year, most taxpayers should have received income documents near the end of January, including:

    Forms W-2, Wage and Tax Statement

    Form 1099-MISC, Miscellaneous Income

    Form 1099-INT, Interest Income

    Form 1099-NEC, Nonemployee Compensation

    Form 1099-G, Certain Government Payments; like unemployment compensation or state tax refund

    Incorrect Form 1099-G for unemployment benefits

    Millions of Americans received unemployment compensation in 2020, many of them for the first time. This compensation is taxable and must be included as gross income on their tax return.

    Taxpayers who receive an incorrect Form 1099-G for unemployment benefits they did not receive should contact the issuing state agency to request a revised Form 1099-G showing they did not receive these benefits. Taxpayers who are unable to obtain a timely, corrected form from states should still file an accurate tax return, reporting only the income they received.

  • Get answers to Economic Impact Payment questions

    Get answers to Economic Impact Payment questions

     

    WASHINGTON  (TIP): The IRS is regularly updating the Economic Impact Payment  and the Get My Payment tool frequently asked questions pages on IRS.gov as more information becomes available. Taxpayers should check the FAQs often for the latest additions; many common questions are answered in these.

    More than 80 million Economic Impact Payments have already been delivered to the nation’s taxpayers. More payments are on their way. As part of this effort, the IRS has launched two tools to help taxpayers get their payments:

     Get My Payment is helping millions of taxpayers. Since its launch on April 15, millions of  taxpayers have been able to input their direct deposit information to speed—and track—their payments. The IRS reminds taxpayers the information is updated once daily, usually overnight, so they only need to enter information once a day.

     The Non-Filers Enter Payment Info tool is helping millions of taxpayers successfully submit basic information to receive Economic Impact Payments quickly to their bank accounts. This tool is designed only for people who are not required to submit a tax return.

     

    The IRS is working hard to deliver Economic Impact Payments to all eligible Americans as quickly as possible.

    Quick links to the Frequently Asked Questions on IRS.gov:

    Economic Impact Payments: www.irs.gov/eipfaq

    Get My Payment tool: www.irs.gov/getmypaymentfaq

  • IRS warns against ‘ghost’ tax return preparers

     

    WASHINGTON  (TIP): With the start of the 2020 tax filing season near, the Internal Revenue Service is reminding taxpayers to avoid unethical “ghost” tax return preparers.

    According to the IRS, a ghost preparer does not sign a tax return they prepare. Unscrupulous ghost preparers will print the return and tell the taxpayer to sign and mail it to the IRS. For e-filed returns, the ghost will prepare but refuse to digitally sign as the paid preparer.

    By law, anyone who is paid to prepare or assists in preparing federal tax returns must have a valid Preparer Tax Identification Number, or PTIN. Paid preparers must sign and include their PTIN on the return. Not signing a return is a red flag that the paid preparer may be looking to make a fast buck by promising a big refund or charging fees based on the size of the refund.

    Ghost tax return preparers may also:

    • Require payment in cash only and not provide a receipt.
    • Invent income to qualify their clients for tax credits.
    • Claim fake deductions to boost the size of the refund.
    • Direct refunds into their bank account, not the taxpayer’s account.

    The IRS urges taxpayers to choose a tax return preparer wisely. The Choosing a Tax Professional page on IRS.gov has information about tax preparer credentials and qualifications. The IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications can help identify many preparers by type of credential or qualification.

    Free basic income tax return preparation with e-file is available to qualified individuals from IRS-certified volunteers at Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) sites across the country. For more information and to find the closest visit Free Tax Return Preparation for Qualifying Taxpayers on IRS.gov

    No matter who prepares the return, the IRS urges taxpayers to review it carefully and ask questions about anything not clear before signing. Taxpayers should verify both their routing and bank account number on the completed tax return for any direct deposit refund. And taxpayers should watch out for ghost preparers inserting their bank account information onto the returns.

    Taxpayers can report preparer misconduct to the IRS using IRS Form 14157, Complaint: Tax Return Preparer. If a taxpayer suspects a tax preparer filed or changed their tax return without their consent, they should file Form 14157-A, Tax Return Preparer Fraud or Misconduct Affidavit.

     

  • IRS selects new advisory council members for 2020

    WASHINGTON (TIP): The Internal Revenue Service announced  December 12  the appointment of 12 new members to the Internal Revenue Service Advisory Council.

     

    The IRSAC, established in 1953, is an organized public forum for IRS officials and representatives of the public to discuss various issues in tax administration. The council provides the IRS commissioner with relevant feedback, observations and recommendations. It will submit its annual report to the agency at a public meeting in Nov. 2020.

     

    The IRS strives to appoint members to the IRSAC who represent the taxpaying public, the tax professional community, small and large businesses, tax exempt and government entities and information reporting interests.

     

    The following persons were appointed to serve three-year appointments on the council beginning in 2020:

     

    Walter “Ted” Afield – Afield is director of the Philip C. Cook Low-Income Taxpayer Clinic and associate clinical professor of law at Georgia State University in Atlanta. He is a member of the American Bar Association Tax Section, the Florida Bar Association and the Atlanta Bar Association.

     

    Martin Armstrong – Armstrong is vice president of Payroll Shared Services with Charter Communications, Inc., in Charlotte, N.C. He is also currently the accounting and finance area chair for the University of Phoenix. Armstrong is a member of the American Payroll Association and the National Association of Tax Professionals.

     

    Sharon Brown – Brown is a partner with Barclay Damon LLP in New York. She is a member of American Bar Association Tax Section and Affordable Housing and Community Development Section, the New York State Bar Association and the National Association of Bond Lawyers.

     

    Robert Howren – Howren is tax director/assistant treasurer for BlueLinx Corporation in Marietta, Ga. He is a member of the Tax Executives Institute, the American Institute of Certified Public Accountants and the Georgia Society of CPAs.

    Denise Jackson – Jackson is the vice president of tax preparer development with the State Employees’ Credit Union in Raleigh, N.C, where she supervises and coordinates the training program for over 3,000 tax preparers for the credit union’s 267 branches. She is an enrolled agent and CFP practitioner.

    Kathleen Lach – Lach is a partner in the business and finance department of Saul Ewing Arnstein & Lehr LLP, in Chicago. She is a member of the American Bar Association Tax Section, the Women’s Bar Association and the Chicago Bar Association Alliance for Women.

    Kelly Myers – Myers is a tax consultant with Myers Consulting Group, LLC, in Owens Crossroads, Ala. He is a member of the National Association of Enrolled Agents, the National Association of Tax Professionals, the National Society of Accountants and the National Society of Tax Professionals.

    Joseph Novak – Novak is vice president of taxes for Abbott Laboratories in Abbott Park, Ill. Novak has served in Abbott’s corporate tax organization since 2004 in a variety of roles, including leadership positions in the income tax accounting, transfer pricing, planning and compliance groups. He is a licensed certified public accountant and member of the Tax Executives Institute.

    Robert Panoff – Panoff is a tax attorney in Miami. He is past chair of both the tax section and the continuing legal education committee of the Florida Bar, past president and current member of the Greater Miami Tax Institute, and member of the Miami International Tax Group. He is a recipient of the tax section’s Gerald T. Hart Outstanding Tax Attorney of the Year Award.

    Nancy Ruoff – Ruoff is the Statewide Payroll and Collections Manager for the State of Kansas in Topeka, Kan. She is a certified public accountant and member of the American Payroll Association’s Strategic Payroll Leadership Tax Force Government/Public Sector Subcommittee and the National Association of State Comptrollers’ Payroll Information Sharing Group.

    Katherine Sunderland – Sunderland is assistant general counsel of tax law at the Investment Company Institute in Washington, an association representing regulated funds globally. She is also involved in OECD’s Business Advisory Group to the OECD’s projects on the Common Reporting Standard (CRS), Tax Relief and Compliance Enhancement (TRACE) and the Digital Economy.

    Kevin Valuet – Valuet is senior payroll consultant for PayTech, Inc. He is a member of the American Payroll Association Government Relations Task Force, Strategic Payroll Leadership Task Force and Certification Item Development Task Force.

    The 2020 IRSAC Chair is Diana Erbsen, a New York-based tax partner at DLA Piper. She previously served as deputy assistant attorney general for appellate and review for the tax division of the U.S. Department of Justice from Nov. 2014 until Jan. 2017. Erbsen has been an IRSAC member since 2018.

    For more information on IRSAC, please visit the Facts page on IRS.gov.

    (Press Release)

  • IRS sees surge in email phishing scams; Summit Partners urge taxpayers: ‘Don’t Take the Bait’

    IRS sees surge in email phishing scams; Summit Partners urge taxpayers: ‘Don’t Take the Bait’

    WASHINGTON(TIP): With the approach of the holidays and the 2019 filing season, the Internal Revenue Service, state tax agencies and the nation’s tax industry warned people to be on the lookout following a surge of new, sophisticated email phishing scams.

    Taxpayers saw many more phishing scams in 2018 as the IRS recorded a 60 percent increase in bogus email schemes that seek to steal money or tax data. These schemes can endanger a taxpayer’s financial and tax data, allowing identity thieves a chance to try stealing a tax refund.

    The Internal Revenue Service, state tax agencies and the tax community, partners in the Security Summit, are marking “National Tax Security Awareness Week” Dec. 3 -7, with a series of reminders to taxpayers and tax professionals. In part two, the topic is email phishing scams.

    “The holidays and tax season present great opportunities for scam artists to try stealing valuable information through fake emails,” said IRS Commissioner Chuck Rettig. “Watch your inbox for these sophisticated schemes that try to fool you into thinking they’re from the IRS or our partners in the tax community. Taking a few simple steps can protect yourself during the holiday season and at tax time.”

    In the second part of this week’s National Tax Security Awareness Week series, the IRS and Summit partners warned against a new influx of phishing scams.

    Tax-related phishing scams reported to the IRS declined for the prior three years until a surge in 2018. More than 2,000 tax-related scam incidents were reported to the IRS from January through October, compared to approximately 1,200 incidents in all of 2017.

    One recent malware campaign used a variety of subjects like “IRS Important Notice,” “IRS Taxpayer Notice” and other variations. The phishing emails, which use varying language, demands a payment or threatens to seize the recipient’s tax refund.

    Taxpayers can help spot these schemes by examples of misspelling and bad grammar. Taxpayers can forward these email schemes to phishing@irs.gov.

    The most common way for cybercriminals to steal money, bank account information, passwords, credit cards or Social Security numbers is to simply ask for them. Every day, people fall victim to phishing scams or phone scams that cost them their time and their cash.

    Phishing attacks use email or malicious websites to solicit personal, tax or financial information by posing as a trustworthy organization. Often, recipients are fooled into believing the phishing communication is from someone they trust. A scam artist may take advantage of knowledge gained from online research and earlier attempts to masquerade as a legitimate source, including presenting the look and feel of authentic communications, such as using an official logo. These targeted messages can trick even the most cautious person into taking action that may compromise sensitive data.

    The scams may contain emails with hyperlinks that take users to a fake site. Other versions contain PDF attachments that may download malware or viruses.

    Some phishing emails will appear to come from a business colleague, friend or relative. These emails might be an email account compromise. Remember, criminals may have compromised your friend’s email account and begin using their email contacts to send phishing emails.

    Not all phishing attempts are emails – some are phone scams. One of the most common phone scams is the caller pretending to be from the IRS and threatening the taxpayer with a lawsuit or with arrest if payment is not made immediately, usually through a debit card.

    In addition, phishing@irs.gov continues to receive a large volume of IRS telephone scam complaints. These phone scams increased again in 2018 with reports to phishing@irs.gov recording thousands of telephone numbers from email complaints each week.

    Phishing attacks, especially online phishing scams, are popular with criminals because there is no fool-proof technology to defend against them. Users are the main defense. When users see a phishing scam, they should ensure they don’t take the bait.

    Here are a few steps to take to protect against phishing and other tax-related schemes:

    Be vigilant; be skeptical. Never open a link or attachment from an unknown or suspicious source. Even if the email is from a known source, approach with caution. Cybercrooks are adept at mimicking trusted businesses, friends and family — including the IRS and others in the tax business. Thieves may have compromised a friend’s email address, or they may be spoofing the address with a slight change in text, such as name@example.com vs narne@example.com. In the latter, merely changing the “m” to an “r” and “n” can trick people.

    Remember, the IRS doesn’t initiate spontaneous contact with taxpayers by email to request personal or financial information. This includes asking for information via text messages and social media channels. The IRS does not call taxpayers with aggressive threats of lawsuits or arrests.

    Phishing schemes thrive on people opening the message and clicking on hyperlinks. When in doubt, don’t use hyperlinks and go directly to the source’s main web page. Remember, no legitimate business or organization will ask for sensitive financial information via email.

    Use security software to protect against malware and viruses found in phishing emails. Some security software can help identify suspicious websites that are used by cybercriminals.

    Use strong passwords to protect online accounts. Each account should have a unique password. Use a password manager if necessary. Criminals count on people using the same password repeatedly, giving crooks access to multiple accounts if they steal a password – creating opportunities to build phishing schemes. Experts recommend the use of a passphrase, instead of a password, use a minimum of 10 digits, including letters, numbers and special characters. Longer is better.

    Use multi-factor authentication when offered. Some online financial institutions, email providers and social media sites offer multi-factor protection for customers. Two-factor authentication means that in addition to entering your username and password, you must enter a security code generally sent as a text to your mobile phone. Even if a thief manages to steal usernames and passwords, it’s unlikely the crook would also have a victim’s phone.

    The IRS, state tax agencies and the tax industry are working together to fight against tax-related identity theft and to protect taxpayers. Everyone can help. Visit the “Taxes. Security. Together.” awareness campaign or review IRS Publication 4524, Security Awareness for Taxpayers, to learn more. Tax professionals can also get more information through the Protect Your Clients; Protect Yourself campaign as well as the Tax Security 101 series.

    (Press Release)

  • Taxpayers with high incomes, complex returns: Check withholding soon to avoid a year-end tax surprise

    Taxpayers with high incomes, complex returns: Check withholding soon to avoid a year-end tax surprise

    WASHINGTON(TIP): The Internal Revenue Service today urged high-income taxpayers and those with complex tax returns to check their withholding soon to avoid an unexpected tax bill or penalty when they file their 2018 federal income tax return in 2019.

    The Tax Cuts and Jobs Act, the tax reform legislation passed in December, made major changes to the tax law, including increasing the standard deduction, removing personal exemptions, increasing the Child Tax Credit, limiting or discontinuing certain deductions and changing tax rates and tax brackets.

    Any of these far-reaching changes could have a big impact on the tax refund or balance due on the tax return taxpayers file next year. That’s why the IRS encourages every employee to do a “paycheck checkup” soon to check that they are having the right amount of tax taken out of their pay. The IRS Withholding Calculator and Publication 505, Tax Withholding and Estimated Tax, can help.

    A checkup is especially important for those with high incomes and complex returns because they are often affected by more of these changes than people with simpler returns. This is also true if they also make quarterly estimated tax payments to cover other sources of income or are subject to the self-employment tax or alternative minimum tax.

    Changes that affect high-income taxpayers

    For 2018, the standard deduction nearly doubled to $24,000 for joint filers and $12,000 for singles. There were also numerous changes to itemized deductions, including:

    – A $10,000 cap on deductions for state and local property, sales and income taxes.

    – New limits on deductions for some mortgage interest and home equity debt.

    – Higher limits on the percent of income a taxpayer can deduct as charitable contributions.

    – No deduction for those miscellaneous expenses that, in prior tax years, had to exceed 2 percent of a filer’s income to qualify. These included investment expenses and un-reimbursed employee expenses such as travel, meals, entertainment and uniforms.

    Many who itemized in the past may find they’ll pay less tax in 2018 by taking the standard deduction.

    Do a ‘paycheck checkup’ soon

    Checking and adjusting how much tax is withheld from pay now can prevent an unexpected tax bill and penalties next year at tax time. It can also help taxpayers avoid a large tax refund, if they’d prefer to have their money in their paychecks throughout the year.

    Taxpayers need to adjust their withholding as soon as possible for an even, consistent amount of withholding throughout the rest of the year. Waiting means there are fewer pay periods to withhold the necessary federal tax – so more tax will have to be withheld from each remaining paycheck.

    Whether someone uses the Withholding Calculator or Publication 505, it’s helpful to have their completed 2017 tax return handy to help estimate the amount of income, deductions, adjustments and credits to enter. They’ll also need their most recent pay stubs to help compute their withholding to date.

    Employees can use the results from the Withholding Calculator or Publication 505 to help determine if they should complete a new Form W-4, Employee’s Withholding Allowance Certificate, and what information to include on the form.

    Though primarily designed for employees who receive wages, the Withholding Calculator can also be helpful to some taxpayers receiving pension and annuity income. Recipients of pensions and annuities can change their withholding by completing Form W-4P and submitting it to their payer.

    All taxpayers should remember that if their personal circumstances change during the year, they should re-check their withholding.

    Taxpayers who change their withholding for 2018 should recheck their withholding at the start of 2019. This is especially important for taxpayers who reduce their withholding sometime during 2018. A mid-year withholding change in 2018 may have a different full-year impact in 2019. So, if taxpayers don’t submit a new Form W-4 for 2019, their withholding might be higher or lower than intended. To help protect against having too little withheld in 2019, taxpayers should check their withholding again early in 2019.

    People with more complex situations may need to use Publication 505

    Taxpayers with more complex situations might need to use Publication 505 instead of the Withholding Calculator. This includes employees who owe self-employment tax, the alternative minimum tax or tax on unearned income from dependents. It can also help those who receive non-wage income such as dividends, capital gains, rents and royalties. The publication includes worksheets and examples to guide taxpayers through these special situations.

    In some of these situations, a household may make estimated tax payments but also have tax withheld by an employer. It’s important to account for both amounts when figuring how much tax to have an employer withhold. Publication 505 helps taxpayers include estimated tax payments; the Withholding Calculator does not.

    Adjusting withholding

    If an employee determines they should adjust their withholding, they should complete a new Form W-4 and submit it to their employer as soon as possible. Some employers have an electronic method to update a Form W-4.

    If an employee has a change in personal circumstances that reduces the number of withholding allowances they can claim, they must submit a new Form W-4 within 10 days of the change with the correct number of allowances.

    As a general rule, the fewer withholding allowances an employee enters on the Form W-4, the higher their tax withholding will be. Entering “0” or “1” on line 5 of the Form W-4 means more tax will be withheld. Entering a bigger number means less tax withholding, resulting in a smaller tax refund or potentially a tax bill or penalty.

    Taxpayers may also need to determine if they should make adjustments to their state or local withholding. They can contact their state’s department of revenue to learn more.

    Additional information

    The Withholding Calculator does not request personally identifiable information such as name, Social Security number, address or bank account number. The IRS does not save or record the information entered on the calculator. As always, taxpayers should watch out for tax scams, especially via email or phone and be alert to cybercriminals impersonating the IRS. The IRS does not send emails related to the calculator or the information entered in it.

    The calculator and Publication 505 are not tax-planning tools. Taxpayers needing advice regarding the new tax law and their personal situation should consult a trusted tax professional.

    Taxpayers can get more information on these topics at www.irs.gov/withholding. Additionally, IRS.gov/getready has information about steps taxpayers can take now to get a jump on next year’s taxes, including how the new tax law may affect them.

    (IRS)

  • Beware the IRS Impersonator

    Beware the IRS Impersonator

    By Prof I.S.Saluja

    It is tax season. It is time to pay taxes. And I hope all are serious about the tax paying business. There are some who are more active than a conscientious tax payer. It is the IRS impersonators. Come tax season, and they become active. Their modus operandi is to call and create an impression that the callers are genuine IRS officials. They introduce themselves as any professional IRS official will, giving their ID, which, of course, is not a real one. They will tell the person called that he has committed a fraud on IRS and that there are warrants of arrest. Many are filled with fear and visions of their being arrested and thrown behind bars. Something which they never ever dreamed of.  Also, the impersonator will instill greater fear by saying that because of the offence committed, the called person will face deportation. Again, many will shudder at the thought of losing career and being banished from the country to face an uncertain future back in the country he had come from. The impersonating IRS officials are experts at their job. It requires nerves of steel not to be filled with fear over their threats, which believe me, sound quite real.

    However, once they know they have succeeded in frightening   a guy they will ask for amount due to be paid straightaway. And they have elaborate schemes to get the money from frightened guys. They do not give any time to the called person to think or consult somebody. Every year during the tax period we hear stories of people having been cheated.

    IRS has been at pains to warn people of these impersonators and cheats. They keep telling that IRS will send notice if at all there is something amiss with an income tax return or if the department wants a tax payer to make a payment. Yet, many fall a prey to the wiles of these impersonators.

    I will advice readers of The Indian Panorama not to panic when such a call is received. A little caution and you will save your hard-earned dollars.

    Good Luck!