IRS Tax News

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  • 21 Sep 2021 10:39 AM | Anonymous

    Notice 2021-54 sets forth updates on the corporate bond monthly yield curve, the corresponding spot segment rates for September 2021 used under § 417(e)(3)(D), the 24-month average segment rates applicable for September 2021, and the 30-year Treasury rates, as reflected by the application of § 430(h)(2)(C)(iv).

    Notice 2021-54 will be in IRB: 2021-41, dated October 12, 2021.


  • 17 Sep 2021 11:12 AM | Anonymous

    WASHINGTON – The Internal Revenue Service today explained how expanded tax benefits can help both individuals and businesses give to charity before the end of this year.

    The Taxpayer Certainty and Disaster Tax Relief Act of 2020, enacted last December, provides several provisions to help individuals and businesses who give to charity. The new law generally extends through the end of 2021 four temporary tax changes originally enacted by the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Here is a rundown of these changes.

    Deduction for individuals who don’t itemize; cash donations up to $600 qualify

    Ordinarily, individuals who elect to take the standard deduction cannot claim a deduction for their charitable contributions. The law now permits these individuals to claim a limited deduction on their 2021 federal income tax returns for cash contributions made to certain qualifying charitable organizations. Nearly nine in 10 taxpayers now take the standard deduction and could potentially qualify to claim a limited deduction for cash contributions.

    These individuals, including married individuals filing separate returns, can claim a deduction of up to $300 for cash contributions made to qualifying charities during 2021. The maximum deduction is increased to $600 for married individuals filing joint returns.

    Cash contributions to most charitable organizations qualify. However, cash contributions made either to supporting organizations or to establish or maintain a donor advised fund do not qualify. Cash contributions carried forward from prior years do not qualify, nor do cash contributions to most private foundations and most cash contributions to charitable remainder trusts. In general, a donor-advised fund is a fund or account maintained by a charity in which a donor can, because of being a donor, advise the fund on how to distribute or invest amounts contributed by the donor and held in the fund. A supporting organization is a charity that carries out its exempt purposes by supporting other exempt organizations, usually other public charities. See Publication 526 for more information on the types of organizations that qualify.

    Cash contributions include those made by check, credit card or debit card as well as amounts incurred by an individual for unreimbursed out-of-pocket expenses in connection with the individual’s volunteer services to a qualifying charitable organization. Cash contributions don’t include the value of volunteer services, securities, household items or other property.

    100% limit on eligible cash contributions made by itemizers in 2021

    Subject to certain limits, individuals who itemize may generally claim a deduction for charitable contributions made to qualifying charitable organizations. These limits typically range from 20% to 60% of adjusted gross income (AGI) and vary by the type of contribution and type of charitable organization. For example, a cash contribution made by an individual to a qualifying public charity is generally limited to 60% of the individual’s AGI. Excess contributions may be carried forward for up to five tax years.

    The law now permits electing individuals to apply an increased limit (“Increased Individual Limit”), up to 100% of their AGI, for qualified contributions made during calendar-year 2021. Qualified contributions are contributions made in cash to qualifying charitable organizations.

    As with the new limited deduction for nonitemizers, cash contributions to most charitable organizations qualify, but, cash contributions made either to supporting organizations or to establish or maintain a donor advised fund, do not. Nor do cash contributions to private foundations and most cash contributions to charitable remainder trusts

    Unless an individual makes the election for any given qualified cash contribution, the usual percentage limit applies. Keep in mind that an individual’s other allowed charitable contribution deductions reduce the maximum amount allowed under this election. Eligible individuals must make their elections with their 2021 Form 1040 or Form 1040-SR.

    Corporate limit increased to 25% of taxable income

    The law now permits C corporations to apply an increased limit (Increased Corporate Limit) of 25% of taxable income for charitable contributions of cash they make to eligible charities during calendar-year 2021. Normally, the maximum allowable deduction is limited to 10% of a corporation’s taxable income.

    Again, the Increased Corporate Limit does not automatically apply. C corporations must elect the Increased Corporate Limit on a contribution-by-contribution basis.

    Increased limits on amounts deductible by businesses for certain donated food inventory

    Businesses donating food inventory that are eligible for the existing enhanced deduction (for contributions for the care of the ill, needy and infants) may qualify for increased deduction limits. For contributions made in 2021, the limit for these contribution deductions is increased from 15% to 25%. For C corporations, the 25% limit is based on their taxable income. For other businesses, including sole proprietorships, partnerships, and S corporations, the limit is based on their aggregate net income for the year from all trades or businesses from which the contributions are made. A special method for computing the enhanced deduction continues to apply, as do food quality standards and other requirements.

    Keep good records

    The IRS reminds individuals and businesses that special recordkeeping rules apply to any taxpayer claiming a charitable contribution deduction. Usually, this includes obtaining an acknowledgment letter from the charity before filing a return and retaining a cancelled check or credit card receipt for contributions of cash. For donations of property, additional recordkeeping rules apply, and may include filing a Form 8283 and obtaining a qualified appraisal in some instances.

    For details on how to apply the percentage limits and a description of the recordkeeping rules for substantiating gifts to charity, see Publication 526, Charitable Contributions, available on IRS.gov.

    The IRS also encourages employers to help get the word out about the advanced payments of the Child Tax Credit because they have direct access to many employees and individuals who receive this credit. More information on the Advanced Child Tax Credit is available on IRS.gov.

    For more information about other Coronavirus-related tax relief, visit IRS.gov/Coronavirus.


  • 16 Sep 2021 12:33 PM | Anonymous

    WASHINGTON – The Internal Revenue Service today reminds taxpayers about the upcoming Oct. 15 due date to file 2020 tax returns. People who asked for an extension should file on or before the extension deadline to avoid the penalty for filing late. Electronic filing options, such as IRS Free File, are still available.

    Although Oct. 15 is the last day for most people to file, some taxpayers may have more time. They include:

    • Members of the military and others serving in a combat zone. They typically have 180 days after they leave the combat zone to file returns and pay any taxes due.
    • Taxpayers in federally declared disaster areas who already had valid extensions. For details, see the disaster relief page on IRS.gov.

    There is usually no penalty for failure to file if the taxpayer is due a refund. However, people who wait too long to file and claim a refund, risk losing it altogether. Those who have yet to file a 2020 tax return, owe tax, and did not request an extension can generally avoid additional penalties and interest by filing the return as soon as possible and paying any taxes owed.

    Schedule federal tax payments electronically

    Taxpayers can file now and schedule their federal tax payments up to the Oct. 15 due date. They can pay online, by phone or with their mobile device and the IRS2Go app. When paying federal taxes electronically taxpayers should remember:

    • Electronic payment options are the optimal way to make a tax payment.
    • They can pay when they file electronically using tax software online. If using a tax preparer, taxpayers should ask the preparer to make the tax payment through an electronic funds withdrawal from a bank account.
    • IRS Direct Pay allows taxpayers to pay online directly from a checking or savings account for free, and to schedule payments up to 365 days in advance.
    • Choices to pay with a credit card, debit card or digital wallet option are available through a payment processor. The payment processor, not the IRS, charges a fee for this service.
    • The IRS2Go app provides the mobile-friendly payment options, including Direct Pay and debit or credit card payments on mobile devices.
    • The Electronic Federal Tax Payment System is convenient safe and easy. Choose to pay online or by phone by using the EFTPS Voice Response System.

    View tax account online

    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. This includes:

    • Adjusted Gross Income: This can be useful if using a different tax software or tax preparer this year.
    • Economic Impact Payment amounts: Eligible individuals who did not receive the full amounts of both Economic Impact Payments may claim the Recovery Rebate Credit on their 2020 federal tax return. To claim the full amount, taxpayers will need to know the amounts of the Economic Impact Payments received. These amounts can be found on the Tax Records tab in online account.
    • Estimated tax payment amounts: The total of any estimated tax payments made during the year or refunds applied as a credit can be found on the Account Balance tab in online account, and a record of each payment appears under Payment Activity.

    Additionally, taxpayers can view the:

    • Amount owed for any past years, updated for the current calendar day,
    • Payment history and any scheduled or pending payments,
    • Payment plan details,
    • Digital copies of select notices from the IRS, and
    • Approve or reject authorization requests from tax professionals.

    Choose direct deposit for refunds

    The safest and fastest way for people to get a refund is to file electronically and have their refund electronically deposited into their bank or other financial account. Taxpayers can use direct deposit to deposit their refund into one, two or even three accounts. They can also purchase U.S. Savings Bonds.

    People who don’t have a bank account can go to the FDIC website or the National Credit Union Association to use their Credit Union Locator Tool for information on where to open an online bank or credit union account. Veterans can use the Veterans Benefits Banking Program (VBBP) for access to financial services at participating banks.

    Monthly advance Child Tax Credit payments

    Millions of American families currently receive monthly advance Child Tax Credit payments either through direct deposit or paper check. These payments represent half of the increased Child Tax Credit from the American Rescue Plan and will continue through the end of the year.

    For those eligible and on extension for their 2020 tax returns, the IRS is using previous year tax information, 2019 for most, to determine the credit amount. The IRS urges people who requested an extension to file as soon as possible if they experienced a major change such as the birth of a child in 2020. Once that return is processed, the IRS can calculate the credit based on the 2020 return and pay it out in full over the remaining months in 2021.

    Those who file and have their 2020 return processed on or before Nov. 1, may be eligible for two payments of half the credit in 2021. Similarly, people who file and have their return processed on or before Nov. 29, may be eligible for one payment.

    To speed the processing of returns and to avoid delays, the IRS urges everyone to file electronically.

    Complete information on the advance Child Tax Credit is available on IRS.gov.

    Act soon to claim missing stimulus payments

    For anyone who missed out on the first two rounds of stimulus payments, it’s not too late. People who didn't get a first and second Economic Impact Payment or got less than the full amounts can get that missing money if they’re eligible for it, but they need to act soon.

    When it comes to missing stimulus payments, it’s critical that eligible people file a 2020 tax return or use the Child Tax Credit Non-filer Sign-up Tool soon even if they don’t usually file to provide information the IRS needs to send the payments. The IRS will also automatically evaluate the taxpayer’s eligibility for the third economic impact payment when the 2020 return is processed.

    The IRS will continue to issue eligible taxpayers their third economic impact payment and plus-up payments through the end of 2021. File a 2020 tax return electronically as soon as possible to give the IRS time to process and issue the payments before the end of 2021.

    IRS.gov assistance

    Taxpayers will find answers to many questions using the Interactive Tax Assistant (ITA), a tax law resource that works using a series of questions and responses. Additionally, the IRS provides payment options at IRS.gov/payments and tax information is available in several languages by clicking on the “English” tab on the front page of IRS.gov.


  • 16 Sep 2021 12:32 PM | Anonymous

    Revenue Ruling 2021-18 provides various prescribed rates for federal income tax purposes including the applicable federal interest rates, the adjusted applicable federal interest rates, the adjusted federal long-term rate, and the adjusted federal long-term tax-exempt rate. These rates are determined as prescribed by § 1274.

    It will appear in IRB 2020-40 dated Oct. 4, 2021.


  • 16 Sep 2021 7:36 AM | Anonymous

    WASHINGTON — The Internal Revenue Service and the Treasury Department announced today that millions of American families are now receiving their advance Child Tax Credit (CTC) payment for the month of September.

    This third batch of advance monthly payments, totaling about $15 billion, is reaching about 35 million families today across the country. The majority of payments will be issued by direct deposit. Under the American Rescue Plan, most eligible families received payments dated July 15 and Aug. 13, along with today’s Sept. 15 payment. Future payments are scheduled for Oct. 15, Nov. 15 and Dec. 15. For these 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 further details on these payments:

    • Families will see the direct deposit payments in their accounts starting today, Sept. 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 September, for delivery by mail. Those wishing to receive future payments by direct deposit can make this change using the Child Tax Credit Update Portal available only on IRS.gov. To access the portal or to get a new step-by-step guide for using it, visit IRS.gov/childtaxcredit2021. A change made by 11:59 p.m. Eastern Time on Oct. 4 will apply starting with the October payment.
    • Payments went to eligible families who filed a 2019 or 2020 income tax return. Returns processed by Aug. 30 are reflected in these payments. This includes people who don’t typically file a return but during 2020 successfully registered for Economic Impact Payments using the IRS Non-Filers tool on IRS.gov or in 2021 successfully used the Non-filer Sign-up Tool for advance CTC, also available only on IRS.gov.
    • Payments are automatic. Aside from filing a tax return, which could include filing a simplified return from the Non-filer Sign-up Tool, families don’t have to do anything if they are eligible to receive monthly payments.
    • Families who did not get a July or August payment and are getting their first monthly payment in September will still receive their total advance payment for the year of up to $1,800 for each child under age 6 and up to $1,500 for each child ages 6 through 17. This means that the total payment will be spread over four months, rather than six, making each monthly payment larger. For these families, each payment is up to $450 per month for each child under age 6 and up to $375 per month for each child ages 6 through 17.

    Still time to sign up; additional details

    It’s not too late for families who haven’t filed a 2020 income tax return—including those who are not normally required to file because their incomes are too low—to sign up for advance CTC payments. Most low-income families can get these monthly payments.

    The IRS urges families who normally aren’t required to file a tax return to explore the tools available on IRS.gov. These tools can help determine their eligibility or help them file a simplified tax return to sign up for these payments, as well as to be considered automatically for the third round of Economic Impact Payments of up to $1,400 per person and to claim the Recovery Rebate Credit covering any of the first two rounds of Economic Impact Payments they may have missed.

    The IRS encourages partners and community groups to share information and use available online tools and toolkits to help non-filers, low-income families and other underserved groups sign up to receive these benefits.

    Families can stop payments anytime, even after payments begin. They can do that by using the unenroll feature in the Child Tax Credit Update Portal. Eligible families who make this choice will still receive the rest of their Child Tax Credit as a lump sum when they file their 2021 federal income tax return next year. To stop all payments starting in October and for the rest of 2021, they must unenroll by 11:59 p.m. ET on Oct. 4, 2021.

    For married couples, each spouse must unenroll separately. If they each choose to unenroll, they will receive no monthly payments. If only one spouse unenrolls, they will still receive monthly payments, but they will be half the normal amount.

    The unenroll feature can also be helpful to any family that no longer qualifies for the CTC or believes they will not qualify when they file their 2021 return in 2022. This could happen if, for example, someone else, such as an ex-spouse or another family member, qualifies to claim their child or children as dependents in 2021.

    At the same time, IRS also reminded eligible families who are not getting these payments, especially those who receive little or no income, that the IRS Non-filer Sign-up Tool remains available to use until Oct. 15.

    Links to these tools, a step-by-step guide to using the Non-filer Sign-up Tool, answers to frequently asked questions and other helpful resources are available on the IRS’s special advance CTC 2021 page.


  • 15 Sep 2021 1:00 PM | Anonymous

    WASHINGTON — The Internal Revenue Service, in response to the continued shortages of undyed diesel fuel caused by Hurricanes Ida and Nicholas, will extend the penalty relief provided in IR-2021-176 when dyed diesel fuel is sold or used on the highway.

    In IR-2021-176, released Sept. 1, 2021, the IRS announced that due to the impact of Hurricane Ida it would not impose a penalty when dyed diesel fuel is sold for use or used on the highway for the following parishes in the state of Louisiana:  Ascension, Assumption, East Baton Rouge, East Feliciana, Iberia, Iberville, Jefferson, Lafourche, Livingston, Orleans, Plaquemines, Pointe Coupee, St. Bernard, St. Charles, St. Helena, St. James, St. John the Baptist, St. Martin, St. Mary, St. Tammany, Tangipahoa, Terrebonne, Washington, West Baton Rouge and West Feliciana. That relief has been extended and is effective as of Aug. 29, 2021, and will remain in effect through Sept. 30, 2021.

    In addition, due to the impact of Hurricanes Ida and Nicholas, the IRS is also providing penalty relief to the parishes of Acadia, Allen, Avoyelles, Beauregard, Calcasieu, Cameron, Evangeline, Jefferson Davis, Lafayette, Rapides, St. Landry, Vermilion, and Vernon. This additional relief is effective as of Aug. 29, 2021 and will remain in effect through Sept. 30, 2021.

    This penalty relief is available to any person that sells or uses dyed fuel for highway use. In the case of the operator of the vehicle in which the dyed fuel is used, the relief is available only if the operator or the person selling the fuel pays the tax of 24.4 cents per gallon that is normally applied to diesel fuel for highway use. The IRS will not impose penalties for failure to make semimonthly deposits of this tax. IRS Publication 510, Excise Taxes, has information on the proper method for reporting and paying the tax.

    Ordinarily, dyed diesel fuel is not taxed, because it is sold for uses exempt from excise tax, such as to farmers for farming purposes, for home heating use and to local governments for buses.

    Also, this waiver does not apply to the Internal Revenue Code penalty for using adulterated fuels that do not comply with applicable EPA regulations. Consequently, diesel fuel with sulfur content higher than 15 parts-per-million may not be used in highway vehicles.

    The IRS is closely monitoring the situation and will provide additional relief as needed.


  • 15 Sep 2021 11:17 AM | Anonymous

    WASHINGTON — During National Small Business Week, the Internal Revenue Service reminds business owners that it’s critical to correctly determine whether the individuals providing services are employees or independent contractors.

    An employee is generally considered to be anyone who performs services, if the business can control what will be done and how it will be done. What matters is that the business has the right to control the details of how the worker’s services are performed. Independent contractors are normally people in an independent trade, business or profession in which they offer their services to the public. Doctors, dentists, veterinarians, lawyers, accountants, contractors, subcontractors, public stenographers or auctioneers are generally independent contractors.

    Independent contractor vs. employee
    Whether a worker is an independent contractor or an employee depends on the relationship between the worker and the business. Generally, there are three categories to examine:

    • Behavioral Control − does the company control or have the right to control what the worker does and how the worker does the job?
    • Financial Control − does the business direct or control the financial and business aspects of the worker's job. Are the business aspects of the worker’s job controlled by the payer? (Things like how the worker is paid, are expenses reimbursed, who provides tools/supplies, etc.)
    • Relationship of the Parties − are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?

    Misclassified worker 
    Misclassifying workers as independent contractors adversely affects employees because the employer’s share of taxes is not paid, and the employee’s share is not withheld. If a business misclassified an employee without a reasonable basis, it could be held liable for employment taxes for that worker. Generally, an employer must withhold and pay income taxes, Social Security and Medicare taxes, as well as unemployment taxes. Workers who believe they have been improperly classified as independent contractors can use IRS Form 8919, Uncollected Social Security and Medicare Tax on Wages (.pdf) to figure and report their share of uncollected Social Security and Medicare taxes due on their compensation.

    Voluntary Classification Settlement Program
    The Voluntary Classification Settlement Program (VCSP) is an optional program that provides taxpayers with an opportunity to reclassify their workers as employees for future tax periods for employment tax purposes with partial relief from federal employment taxes for eligible taxpayers that agree to prospectively treat their workers (or a class or group of workers) as employees. Taxpayers must meet certain eligibility requirements, apply by filing Form 8952, Application for Voluntary Classification Settlement Program, and enter into a closing agreement with the IRS.

    Who is self-employed?
    Generally, someone is self-employed if any of the following apply to them.

    Self-employed individuals generally are required to file an annual tax return and pay estimated tax quarterly. They generally must pay self-employment tax (Social Security and Medicare tax) as well as income tax. Self-employed taxpayers may be able to claim the home office deduction if they use part of a home for business. 

    What about the gig economy?
    The gig economy − also called sharing economy or access economy−is activity where people earn income providing on-demand work, services or goods. Gig economy income must be reported on a tax return, even if the income is: from part-time, temporary or side work; not reported on a Form 1099-K, 1099-MISC, W-2 or other income statement; or paid in any form, including cash, property, goods or virtual currency.

    Help spread the word - Advance Child Tax Credit
    The IRS  encourages employers to help get the word out about the advanced payments of the Child Tax Credit during Small Business Week. Employers have direct access to many  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 deliver this information, including e-posters, drop-in articles (for paycheck stuffers, newsletters) and social media posts to share. 

    For more information and help
    The Self-Employed Individuals Tax Center has information for those who are in an independent trade, business or profession in which they offer their services to the general public.
     
    Small Business Taxes: The Virtual Workshop is composed of nine interactive lessons designed to help new small business owners learn their tax rights and responsibilities.

    The IRS Video Portal contains video and audio presentations on topics of interest to small businesses, individuals and tax professionals.


  • 14 Sep 2021 3:10 PM | Anonymous

    WASHINGTON –The Internal Revenue Service will close its paper return processing center in Fresno, California, permanently at the end of September this year. Originally announced in 2016, this closure is part of a larger, ongoing efficiency strategy as most taxpayers now file electronically.

    The number of individual returns taxpayers filed electronically has grown from 90 million in 2008 to over 145 million in 2020, which is more than 90% of all returns filed. The IRS expects this trend to continue for both individual and non-individual returns.

    Where to send returns

    Taxpayers located in Alaska, California, Hawaii, Ohio and Washington state who previously filed their federal tax returns with Fresno should now mail their returns to the Ogden, Utah, processing center.

    The Ogden address for filing paper individual returns is:

    Department of Treasury
    Internal Revenue Service
    Ogden, UT 84201-0002

    Fresno operations

    The IRS will maintain a presence in Fresno with many other operations still working at full capacity. This planned consolidation, however, allows IRS to streamline operations and make better use of existing space.

    When this consolidation was announced in September 2016, there were approximately 3,000 employees employed at the paper processing center in Fresno. Since that time, the IRS has taken steps to provide training and find continued employment opportunities for many of the impacted employees. Others have chosen to retire or separate from the IRS.

    The agency also maintains a Fresno submission processing consolidation update page on IRS.gov.

    IRS.gov assistance 24/7

    The IRS reminds taxpayers that help is available 24/7 on IRS.gov. The IRS website offers a variety of online tools to help taxpayers answer common tax questions. For example, taxpayers can search the Interactive Tax Assistant, Tax Topics and Frequently Asked Questions to get answers to common questions.

    The IRS is continuing to expand ways to communicate to taxpayers who prefer to get information in other languages. The IRS has posted translated tax resources in 20 other languages on IRS.gov. For more information, see We Speak Your Language.


  • 14 Sep 2021 3:09 PM | Anonymous

    Today, the IRS published the latest executive column “A Closer Look,” which features Commissioner Charles Rettig, discussing how the IRS had to pause and modify operations during the pandemic. He also provides a glimpse of what the IRS is doing to help struggling taxpayers and to get caught up during this unprecedented time. “We have done the best we could under the circumstances, and we will continue to do our best as we face the current challenges,” said Rettig. Read more here.

    A Closer Look” is a column from IRS executives that covers a variety of timely issues of interest to taxpayers and the tax community. It also provides a detailed look at key issues affecting everything from IRS operations and employees to issues involving taxpayers and tax professionals.

    Check here for prior posts and new updates.


  • 14 Sep 2021 11:13 AM | Anonymous

    WASHINGTON – With many businesses facing a tight job market, the Internal Revenue Service reminds employers to check out a valuable tax credit available to them for hiring long-term unemployment recipients and other groups of workers facing significant barriers to employment.

    During National Small Business Week, the IRS is highlighting tax benefits and resources designed to help new and existing small businesses. For any business now hiring, the Work Opportunity Tax Credit (WOTC) may help.

    Legislation enacted in December extended the WOTC through the end of 2025. This long-standing tax benefit encourages employers to hire workers certified as members of any of ten targeted groups facing barriers to employment. With millions of Americans out of work at one time or another since the pandemic began, the IRS noted that one of these targeted groups is long-term unemployment recipients who have been unemployed for at least 27 consecutive weeks and have received state or federal unemployment benefits during part or all of that time.

    The other groups include certain veterans and recipients of various kinds of public assistance, among others. Specifically, the 10 groups are:

    • Temporary Assistance for Needy Families (TANF) recipients,
    • Unemployed veterans, including disabled veterans,
    • Formerly incarcerated individuals,
    • Designated community residents living in Empowerment Zones or Rural Renewal Counties,
    • Vocational rehabilitation referrals,
    • Summer youth employees living in Empowerment Zones,
    • Supplemental Nutrition Assistance Program (SNAP) recipients,
    • Supplemental Security Income (SSI) recipients,
    • Long-term family assistance recipients,
    • Long-term unemployment recipients.

    To qualify for the credit, an employer must first request certification by submitting IRS Form 8850, Pre-screening Notice and Certification Request for the Work Opportunity Credit, to their state workforce agency (SWA). Do not submit this form to the IRS.

    Normally, Form 8850 must be submitted to the SWA within 28 days after the eligible worker begins work. But under a special relief provision, a Nov. 8, 2021, submission deadline applies to two groups of new hires—qualified summer youth employees living in Empowerment Zones and designated community residents living in Empowerment Zones.

    To qualify for the Nov. 8 submission deadline, eligible employees must start work on or after Jan. 1, 2021, and before Oct. 9, 2021. Other requirements and further details can be found in Notice 2021-43 and the instructions (.pdf) to Form 8850.

    Eligible businesses claim the WOTC on their federal income tax return. It is generally based on wages paid to eligible workers during the first year of employment.

    The credit is first figured on Form 5884, Work Opportunity Credit, and then is claimed on Form 3800, General Business Credit.

    Though the credit is not available to tax-exempt organizations for most groups of new hires, a special rule allows them to claim the WOTC for hiring qualified veterans. These organizations claim the credit against payroll taxes on Form 5884-C, Work Opportunity Credit for Qualified Tax Exempt Organizations.

    For more information about the Work Opportunity Tax Credit, visit IRS.gov/WOTC.

    Help spread the word-advance Child Tax Credit

    The IRS encourages employers to help get the word out about the advanced payments of the Child Tax Credit during Small Business Week. Employers have direct access to many 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 deliver this information, including e-posters, drop-in articles (for paycheck stuffers, newsletters) and social media posts to share.


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