IRS Tax News

  • 08 Mar 2022 1:11 PM | Anonymous

    WASHINGTON — The Internal Revenue Service today updated its frequently asked questions (FAQs) (FS-2022-17) PDF on the 2021 Child Tax Credit and Advance Child Tax Credit Payments. These updates are to help eligible families properly claim the credit when they prepare and file their 2021 tax return.

    These changes reflect that Publication 972, Child Tax Credit, has become obsolete. Taxpayers should refer to Schedule 8812 (Form 1040). Schedule 8812 (Form 1040) is now used to calculate child tax credits and to report advance child tax credit payments received in 2021, and to figure any additional tax owed if excess advance child tax credit payments  were received during 2021.

    These FAQs revisions and additions are as follows:

    • 2021 Child Tax Credit and Advance Child Tax Credit Payments — Topic B: Eligibility for Advance Child Tax Credit Payments and the 2021 Child Tax Credit: Q3
    • 2021 Child Tax Credit and Advance Child Tax Credit Payments — Topic C: Calculation of the 2021 Child Tax Credit: Q1
    • 2021 Child Tax Credit and Advance Child Tax Credit Payments — Topic D: Calculation of Advance Child Tax Credit Payments: Q1

    These FAQs are being issued to provide general information to taxpayers and tax professionals as expeditiously as possible.

    More information about reliance is available.

    IRS-FAQ


  • 08 Mar 2022 11:34 AM | Anonymous

    WASHINGTON — The Internal Revenue Service reminds taxpayers they may be able to claim a deduction on their 2021 tax return for contributions to their Individual Retirement Arrangement (IRA) made through April 18, 2022.

    An IRA is a personal savings plan that lets employees and the self-employed set money aside for retirement and can have tax advantages. Contributions for 2021 can be made to a traditional or Roth IRA until the filing due date, April 18, but must be designated for 2021 to the financial institution.

    Generally, eligible taxpayers can contribute up to $6,000 to an IRA for 2021. For those 50 years of age or older at the end of 2021, the limit is increased to $7,000. Qualified contributions to one or more traditional IRAs may be deductible up to the contribution limit or 100% of the taxpayer’s compensation, whichever is less. There is no longer a maximum age for making IRA contributions.

    Those who make contributions to certain employer retirement plans, such as a 401k or 403(b), an IRA, or an Achieving a Better Life Experience (ABLE) account, may be able to claim the Saver’s Credit. Also known as the Retirement Savings Contributions Credit, the amount of the credit is generally based on the amount of contributions, the adjusted gross income and the taxpayer’s filing status. The lower the taxpayer’s income (or joint income, if applicable), the higher the amount of the tax credit. Dependents and full-time students are not eligible for the credit. For more information on annual contributions to an ABLE account, see Publication 907, Tax Highlights for Persons With Disabilities.

    While contributions to a Roth IRA are not tax deductible, qualified distributions are tax-free. Roth IRA contributions may be limited based on filing status and income. Contributions can also be made to a traditional and/or Roth IRA even if participating in an employer-sponsored retirement plan (including a SEP or SIMPLE IRA-based plan).

    Taxpayers can find answers to questions, forms and instructions and easy-to-use tools at IRS.gov. 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 For Individuals.

    More resources


  • 04 Mar 2022 1:22 PM | Anonymous

    WASHINGTON – The Internal Revenue Service today announced that many Taxpayer Assistance Centers (TACs) will offer face-to-face Saturday help without an appointment from 9 a.m. to 4 p.m. on Saturday, March 12. Normally TACs are only open weekdays.

    “Being open on select Saturdays is offered for people to get the help they need when they need it,” said IRS Wage and Investment Division Commissioner and Taxpayer Experience Officer Ken Corbin. “We know that many taxpayers work during the week or have other obligations that make it difficult to get away to take care of their taxes during our routine business hours. We’re here to help, and people don’t need an appointment during these special Saturday hours.”

    People can also ask about reconciling advance Child Tax Credit payments, receive help resolving a tax problem, a tax bill or an IRS audit. If assistance from IRS employees specializing in these services is not available, the individual will receive a referral for these services. IRS staff will schedule appointments for a later date for Deaf or Hard of Hearing individuals who need sign language interpreter services. Foreign language interpreters will be available.

    The IRS follows Centers for Disease Control social distancing guidelines for COVID-19, and availability may change without notice. People are required to wear face masks and social distance at these events.

    Please come prepared
    The IRS urges individuals to bring the following information:

    • Current government-issued photo identification
    • Social Security cards and/or ITINs for members of their household, including spouse and dependents (if applicable)
    • Any IRS letters or notices received and related documents

    During the visit, IRS staff may also request the following information:

    • A current mailing address, and
    • Bank account information, to receive payments or refunds by Direct Deposit.

    No tax return preparation will be available at any IRS TAC. The IRS.gov webpage, Contact your local office, lists all services provided at specific TACs.

    Free tax preparation help
    While tax return preparation is not a service offered at IRS TACs during regular hours or during these Saturday hours, the following free resources are available to help most taxpayers prepare and file their 2021 federal tax returns anytime:

    Any individual or family earning $73,000 or less in 2021 can use tax software from providers who make their online products available through IRS Free File at no cost. There are products in English and Spanish.

    Free help preparing tax returns is available at a Volunteer Income Tax Assistance Center (VITA) or Tax Counseling for the Elderly location (TCE) sites. The income limit for VITA assistance is $58,000. To find the closest free tax return preparation help, use the VITA Locator Tool or call 800-906-9887. To find a TCE AARP Tax-Aide site, use the AARP Site Locator Tool or call 1-888-227-7669.

    More information:

    IRS.gov/rrc to learn about filing requirements for the Recovery Rebate Credit


  • 04 Mar 2022 11:58 AM | Anonymous

    WASHINGTON – As part of a longer-term effort to improve taxpayer service, the IRS has officially established the first-ever Taxpayer Experience Office and will soon begin taking additional steps to expand the effort.

    “As the IRS continues taking immediate steps this filing season including adding more employees to address the significant challenges facing a resource-constrained IRS, it’s critical that we work going forward to equip the IRS to be a 21st century resource for Americans,” said IRS Commissioner Chuck Rettig. “The formal establishment of this office will help unify and expand efforts across the IRS to improve service to taxpayers.”

    The Taxpayer Experience Office will focus on all aspects of taxpayer transactions with the IRS across the service, compliance and other program areas, working in conjunction with all IRS business units and coordinating closely with the Taxpayer Advocate Service. The office is part of the effort envisioned in the Taxpayer First Act Report to Congress last year. This included input and feedback from taxpayers, tax professionals and the tax community that helped develop the Taxpayer Experience Strategy. The Report to Congress identified over a hundred different programs and tools that would help taxpayers, including a 360-degree view of taxpayer accounts, expanded e-File and payment options, digital signatures, secure two-way messaging and online accounts for businesses and tax professionals.

    To help drive the IRS strategic direction for improving the taxpayer experience, the Taxpayer Experience Office has identified key activities the IRS is focusing on over the next five years, including those commitments outlined in the President’s Executive Order on Transforming Federal Customer Experience and Service Delivery to Rebuild Trust in Government.

    “The IRS is committed to customer experiences that meet taxpayers where they are, in the moments that matter most in people’s lives and in a way that delivers the service that the public expects and deserves,” said Chief Taxpayer Experience Officer Ken Corbin, who also serves as the commissioner of the Wage and Investment division, which oversees the current filing season and other activities.

    The Taxpayer Experience Office will identify changing taxpayer expectations and industry trends, focus on customer service best practices, and promote a consistent voice and experience across all taxpayer segments by developing agency-wide taxpayer experience guidelines and expectations. The office will be adding staff in the coming months to help support the effort.

    “Whether checking the status of a tax return, meeting with a revenue agent for an audit, or receiving a tax credit to their bank account, improving service delivery and customer experience are fundamental priorities for us,” Corbin said. “We’re committed to designing and delivering services that better connect with our diverse taxpayer base.”

    Some of the areas of improvement in the near-term include expanding customer callback, expanded payment options, secure two-way messaging and more services for multilingual customers. These activities build on recent improvements such as digital tools to support Economic Impact Payments and the Advance Child Tax Credit, online chat and online tax professional account. 


  • 04 Mar 2022 7:03 AM | Anonymous

    WASHINGTON — The IRS is aware of a third-party software issue affecting qualifying farmers and fishermen attempting to electronically file Forms 7203.
     
    Qualifying farmers and fishermen are those who are not subject to an addition to tax for failing to pay the required estimated tax installment payment by January 15, 2022, if they file their returns and pay the full amount of tax reported on the return as payable by March 1, 2022.
     
    The IRS has been working closely with software providers to ease the impact on qualifying farmers and fishermen caused by electronic filing challenges in connection with Form 7203.
     
    Due to these challenges, the Treasury Department and the IRS intend to issue a notice providing penalty relief for qualifying farmers and fishermen filing Forms 7203 if they electronically file their 2021 tax return and pay in full any tax due by April 18, 2022, or by April 19, 2022, for those qualifying farmers and fishermen who live in Maine or Massachusetts.
     
    Farmers and fishermen who filed their returns by the March 1 deadline are unaffected by this news release.


  • 03 Mar 2022 4:27 PM | Anonymous

    WASHINGTON — The Internal Revenue Service today updated its frequently asked questions (FAQs) on Tax Credits for Paid Leave Under the Families First Coronavirus Response Act for Leave Prior to April 1, 2021.

    These FAQs (FS-22-16) revisions add Question 54g and Question 65c.

    These FAQs are being issued to provide general information to taxpayers and tax professionals as expeditiously as possible.

    More information about reliance is available.


  • 03 Mar 2022 4:27 PM | Anonymous

    WASHINGTON — The Internal Revenue Service today updated its frequently asked questions (FAQs) on Tax Credits for Paid Leave Under the American Rescue Plan Act of 2021 for Leave After March 31, 2021.

    These FAQs (FS-22-15) revisions add Questions 98a and 116a.

    These FAQs are being issued to provide general information to taxpayers and tax professionals as expeditiously as possible.

    More information about reliance is available.


  • 02 Mar 2022 12:40 PM | Anonymous

    WASHINGTON — The Internal Revenue Service today issued frequently asked questions (FAQs) for the 2021 Earned Income Tax Credit to educate eligible taxpayers on how to properly claim the credit when they prepare and file their 2021 tax return.

    The Earned Income Tax Credit (EITC) helps low- to moderate-income workers and families in the form of a credit to either reduce the taxes owed or an added payment to increase a tax refund. The amount of the credit may change if the taxpayer has children, dependents, are disabled or meet other criteria.

    These FAQ’s detail what the EITC is, how it was expanded for 2021, which taxpayers are eligible, and how to claim it. 

    The 17 new FAQ’s are:

    • What Is the Earned Income Tax Credit?
    • What is earned income?
    • What are the earned income limits for taxpayers without qualifying children?
    • How old must I be to claim the Earned Income Tax Credit if I do not have qualifying children?
    • Do I need to have a Social Security number (SSN) to be eligible to claim the Earned Income Tax Credit?
    • Do my qualifying children need to have SSNs in order for me to claim the Earned Income Tax Credit?
    • What are the age requirements for claiming the Earned Income Tax Credit if I have a qualifying child?
    • What are the earned income limits for individuals with a qualifying child?
    • Will any refund that I receive because I claimed the Earned Income Tax Credit affect my government benefits?
    • What is the maximum amount of the Earned Income Tax Credit for 2021 for eligible taxpayers without qualifying children?
    • Is there a limit on the amount of investment income I can earn and remain eligible for the Earned Income Tax Credit?
    • If I am not filing a joint return with my spouse, can I claim the Earned Income Tax Credit?
    • Who is considered a qualified homeless youth for purposes of the Earned Income Tax Credit?
    • Who is considered a qualified former foster youth for purposes of the Earned Income Tax Credit?
    • Can I elect to use my 2019 earned income to figure my Earned Income Tax Credit for 2021?
    • Can a student claim the Earned Income Tax Credit for 2021?
    • What is a specified student for purposes of the Earned Income Tax Credit?

    File for free and use direct deposit
    Taxpayers with income is $73,000 or less can file their federal tax returns electronically for free through the IRS Free File Program. The fastest way to receive a tax refund is to file electronically and have it direct deposited into a financial account. Refunds can be directly deposited into bank accounts, prepaid debit cards or mobile apps as long as a routing and account number is provided.

    More information about reliance is available.

    IRS-FAQ


  • 01 Mar 2022 12:36 PM | Anonymous

    WASHINGTON − The Internal Revenue Service reminds taxpayers of their reporting and potential tax obligations from working in the gig economy, making virtual currency transactions, earning foreign-source income or holding certain foreign assets. Information available on IRS.gov and instructions on Form 1040 can help taxpayers in understanding and meeting these reporting and tax requirements.

    Gig economy earnings are taxable
    Generally, income earned from the gig economy is taxable and must be reported to the IRS. The gig economy is activity where people earn income providing on-demand work, services or goods. Often, it’s through a digital platform like an app or website. Taxpayers must report income earned from the gig economy on a tax return, even if the income is:

    • From part-time, temporary or side work,
    • Not reported on an information return form - like a Form 1099-K, 1099-MISC, W-2 or other income statement or
    • Paid in any form, including cash, property, goods or virtual currency.

    For more information on the gig economy, visit the gig economy tax center.

    Understand virtual currency reporting and tax requirements
    The IRS reminds taxpayers that once again there is a question at the top of Form 1040 and Form 1040-SR asking about virtual currency transactions. All taxpayers filing these forms must check the box indicating either “yes” or “no.” A transaction involving virtual currency includes, but is not limited to:

    • The receipt of virtual currency as payment for goods or services provided;
    • The receipt or transfer of virtual currency for free (without providing any consideration) that does not qualify as a bona fide gift;
    • The receipt of new virtual currency as a result of mining and staking activities;
    • The receipt of virtual currency as a result of a hard fork;
    • An exchange of virtual currency for property, goods or services;
    • An exchange/trade of virtual currency for another virtual currency;
    • A sale of virtual currency; and
    • Any other disposition of a financial interest in virtual currency.

    If an individual disposed of any virtual currency that was held as a capital asset through a sale, exchange or transfer, they should check “Yes” and use Form 8949 to figure their capital gain or loss and report it on Schedule D (Form 1040).

    If they received any virtual currency as compensation for services or disposed of any virtual currency they held for sale to customers in a trade or business, they must report the income as they would report other income of the same type (for example, W-2 wages on Form 1040 or 1040-SR, line 1, or inventory or services from Schedule C on Schedule 1). More information on virtual currency can be found in Instruction for Form 1040 and on IRS.gov.

    Report Foreign Source Income
    A U.S. citizen or resident alien’s worldwide income is generally subject to U.S. income tax, regardless of where they live. They’re also subject to the same income tax filing requirements that apply to U.S. citizens or resident aliens living in the United States.

    U.S. citizens and resident aliens must report unearned income, such as interest, dividends, and pensions, from sources outside the United States unless exempt by law or a tax treaty. They must also report earned income, such as wages and tips, from sources outside the United States. An income tax filing requirement generally applies even if a taxpayer qualifies for tax benefits, such as the Foreign Earned Income Exclusion or the Foreign Tax Credit, which substantially reduce or eliminate U.S. tax liability. These tax benefits are only available if an eligible taxpayer files a U.S. income tax return.

    A taxpayer is allowed an automatic 2-month extension to June 15 if both their tax home and abode are outside the United States and Puerto Rico. Even if allowed an extension, a taxpayer will have to pay interest on any tax not paid by the regular due date of April 18, 2022.

    Those serving in the military outside the U.S. and Puerto Rico on the regular due date of their tax return also qualify for the extension to June 15. IRS recommends attaching a statement if one of these two situations apply. More information can be found in the Instructions for Form 1040 and 1040-SR, Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad and Publication 519, U.S. Tax Guide for Aliens.

    Reporting required for foreign accounts and assets
    Federal law requires U.S. citizens and resident aliens to report their worldwide income, including income from foreign trusts and foreign bank and other financial accounts. In most cases, affected taxpayers need to complete and attach Schedule B to their tax return. Part III of Schedule B asks about the existence of foreign accounts, such as bank and securities accounts, and usually requires U.S. citizens to report the country in which each account is located.

    In addition, certain taxpayers may also have to complete and attach to their return Form 8938, Statement of Foreign Financial Assets. Generally, U.S. citizens, resident aliens and certain nonresident aliens must report specified foreign financial assets on this form if the aggregate value of those assets exceeds certain thresholds. See the instructions for this form for details.

    Further, separate from reporting specified foreign financial assets on their tax return, taxpayers with an interest in, or signature or other authority over foreign financial accounts whose aggregate value exceeded $10,000 at any time during 2020, must file electronically with the Treasury Department a Financial Crimes Enforcement Network (FinCEN) Form 114, Report of Foreign Bank and Financial Accounts (FBAR). Because of this threshold, the IRS encourages taxpayers with foreign assets, even relatively small ones, to check if this filing requirement applies to them. The form is only available through the BSA E-filing System website.

    The deadline for filing the annual Report of Foreign Bank and Financial Accounts (FBAR) is the same as that of Form 1040. FinCEN grants filers who missed the original deadline an automatic extension until October 15, 2022, to file the FBAR. There is no need to request this extension.

    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.


  • 25 Feb 2022 7:38 AM | Anonymous

    WASHINGTON — The Internal Revenue Service today updated its frequently asked questions (FAQs) on the Premium Tax Credit.

    FS-2022-13 PDF includes the following FAQ revisions and additions:

    • Updated The Basics FAQs: Q1, Q3, Q4
    • Updated Eligibility FAQs: Q5, Q7, Q8, Q9, Q11
    • Updated Reporting, Claiming and Reconciling FAQs: Q24, Q26, Q27
    • Updated Suspension of Repayment of Excess Advance Payments of the Premium Tax Credit (Excess APTC) for Tax Year 2020 FAQs: Q33, Q36
    • New Unemployment Compensation 2020 and 2021 FAQs: Q38 through Q45

    These FAQs are being issued to provide general information to taxpayers and tax professionals as expeditiously as possible.

    More information about reliance is available.


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