WASHINGTON — Wildfire victims in parts of California now have until Jan. 3, 2022, to file various individual and business tax returns and make tax payments, the Internal Revenue Service announced today. Under relief provided in August, these extensions were generally due to run out on Nov. 15. 

The IRS is providing this additional relief, based on the recent Federal Emergency Management Agency (FEMA) decision to end the incident period for this disaster declaration on Oct. 25. By law, the IRS must provide disaster relief until at least 60 days after the end of the FEMA-designated incident period.

Accordingly, the IRS is now providing more time to any area of California designated by FEMA for either individual or public assistance. Currently, this includes Lassen, Nevada, Placer, Plumas, Tehama and Trinity counties. Any jurisdiction added to the FEMA declaration will automatically receive the IRS relief. The current list of eligible localities is always available on the disaster relief page on IRS.gov.

This relief postpones various tax filing and payment deadlines that occurred starting on July 14, 2021. As a result, affected individuals and businesses will have until Jan. 3, 2022, to file returns and pay any taxes that were originally due during this period. This means individuals who had a valid extension to file their 2020 return that ran out on Oct. 15, 2021, will now have until Jan. 3, 2022, to file. The IRS noted, however, that because tax payments related to these 2020 returns were due on May 17, 2021, those payments are not eligible for this relief.

The Jan. 3, 2022 deadline also applies to quarterly estimated income tax payments due on Sept. 15, 2021, and the quarterly payroll and excise tax returns normally due on Aug. 2 and Nov. 1, 2021. Businesses with an original or extended due date also have the additional time including, among others, calendar-year partnerships and S corporations whose 2020 extensions ran out on Sept. 15, 2021 and calendar-year corporations whose 2020 extensions ran out on Oct. 15, 2021. It also applies to calendar-year tax-exempt organizations whose 2020 extensions run out on Nov. 15, 2021.

In addition, penalties on payroll and excise tax deposits due on or after July 14, 2021 and before July 29, will be abated as long as the deposits were made by July 29, 2021.

The IRS disaster relief page has details on other returns, payments and tax-related actions qualifying for the additional time.

The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. Therefore, taxpayers do not need to contact the agency to get this relief. However, if an affected taxpayer receives a late filing or late payment penalty notice from the IRS that has an original or extended filing, payment or deposit due date falling within the postponement period, the taxpayer should call the number on the notice to have the penalty abated.

In addition, the IRS will work with any taxpayer who lives outside the disaster area but whose records necessary to meet a deadline occurring during the postponement period are located in the affected area. Taxpayers qualifying for relief who live outside the disaster area need to contact the IRS at 866-562-5227. This also includes workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization.

Individuals and businesses in a federally declared disaster area who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2021 return normally filed next year), or the return for the prior year (2020). Be sure to write the FEMA declaration number – DR-4610 −on any return claiming a loss. See Publication 547 for details.

The tax relief is part of a coordinated federal response to the damage caused by these wildfires and is based on local damage assessments by FEMA. For information on disaster recovery, visit disasterassistance.gov.

Revenue Ruling 2021-23 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. 

The rates are published monthly for purposes of sections 42, 382, 412, 642, 1288, 1274, 7520, 7872, and various other sections of the Internal Revenue Code.

Revenue Ruling 2021-23 will be in IRB:  2021-49, dated December 6, 2021.

WASHINGTON – The Internal Revenue Service today launched a new online tool designed to help U.S. withholding agents comply with their reporting and withholding responsibilities with respect to IRS Form 1042-S (Foreign Person’s U.S. Source Income Subject to Withholding).

The tool performs a quality review of data before submission to the IRS. Use of the tool does not change a withholding agent’s obligations to file Forms 1042-S with the IRS and furnish a copy of the Form 1042-S to the payee.

“U.S. withholding agents play an important role in helping the IRS administer the tax code so we are delighted to be able to provide this tool free of charge to assist agents in meeting their filing requirement,” said Nikole Flax, IRS Large Business and International division commissioner.

About the tool

In general, withholding agents, such as banks, insurance companies, universities, entertainment venues and resorts, or other financial institutions must file an information return on Form 1042-S to report amounts paid from U.S. sources to foreign persons. The definition of a withholding agent includes any person, U.S. or foreign, that has control, receipt or custody of amounts that are subject to the rules under Internal Revenue Code Chapter 3 (Withholding of Tax on Nonresident Aliens and Foreign Corporations) or Chapter 4 (Taxes to Enforce Reporting on Certain Foreign Accounts, i.e. FATCA or the Foreign Account Tax Compliance Act). 

The tool is designed to accept Form 1042-S data in common file formats that can be generated by most withholding agents’ back office systems. After uploading the data, the user will receive a report indicating errors and potential errors. A tutorial on how to use the tool can be viewed online or downloaded.

Even though the tool identifies data errors, the withholding agent remains responsible for making changes to the data on the agent’s system of record before submission to the IRS.  The list of resources below will help agents understand and correct errors before submitting the Forms 1042-S.

The tool can be used as many times as necessary on new or revised data. The IRS has no access to the users’ data. Use of the tool is voluntary, but the IRS will take into account a withholding agent’s use of the tool when making enforcement and penalty determinations. 

Help spread the word

The IRS urges information reporting and withholding industry experts and withholding agents to share this critical information with any withholding agents that may benefit from using this tool.

Non-Resident Alien Withholding Resources

• Form 1042-S, Instructions in PDF or HTML and any recent updates
• Form 1042, Instructions in PDF or HTML and any recent updates
• Publication 1187 (.pdf),Specifications for Electronic Filing of Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding
• Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities

WASHINGTON — The Internal Revenue Service and the Treasury Department announced today that millions of American families will soon receive their advance Child Tax Credit (CTC) payment for the month of November. Low-income families who are not getting payments and have not filed a tax return can still get one, but they must sign up on IRS.gov by 11:59 pm Eastern Time on Monday, Nov. 15.

This fifth batch of advance monthly payments, totaling about $15 billion, will reach about 36 million families across the country. The majority of payments are being made by direct deposit.

Under the American Rescue Plan, most eligible families received payments dated July 15, Aug. 13, Sept. 15 and Oct. 15. The last payment for 2021 is scheduled for 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 more details on the November payments:

Sign up by Nov. 15

Recently, the IRS sent letters to many Americans urging them to check out the Child Tax Credit and if they qualify, to sign up soon to get advance payments. Whether or not they got one of these letters, an eligible family who is not already getting monthly payments can still sign up to get an advance payment of the Child Tax Credit.

Treasury and IRS urge any low-income family who doesn’t normally need to file a return to sign up now to get their payment. The deadline is 11:59 pm Eastern Time on Monday, November 15.

Right now, they can only sign up online. To do so, quickly and securely, visit IRS.gov/childtaxcredit2021. Families can choose to file either in English or Spanish.

Families signing up now will normally receive half of their total Child Tax Credit on Dec. 15. This means a payment of up to $1,800 for each child under 6, and up to $1,500 for each child age 6 to 17. This is the same total amount that most other families have been receiving in up to six monthly payments that began in July.

Any family who receives advance payments of the CTC during 2021 can claim the rest of the credit when they file their 2021 Federal income tax return. To help them do that, early in 2022 families will receive Letter 6419 documenting any advance payments issued to them during 2021 and the number of qualifying children used to calculate the advance payments.

Families can make changes to their account

Families who are already receiving monthly payments can use the Child Tax Credit Update Portal (CTC-UP) to quickly update their account. Available only on IRS.gov, CTC-UP already allows families to verify their eligibility for the payments and then, if they choose to:

Updates made by 11:59 pm Eastern Time on Nov. 29 will be reflected in the monthly payment scheduled for Dec. 15.

Later this month, the IRS will launch a Spanish-language version of the tool. In addition, new features will be added to enable families to raise or lower their final monthly payment to reflect life changes, such as another child born or adopted in 2021.

Community partners can help

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.

Links to online tools, answers to frequently asked questions and other helpful resources are available on the IRS’ special advance CTC 2021 page.

WASHINGTON – The Internal Revenue Service today updated its frequently-asked-questions (FAQs) on 2020 Unemployment Compensation Exclusion.

These updated FAQs (FS-2021-14) are:

Question 2, Topic D: Amended Return (Form 1040-X)
Questions 8 & 9, Topic G: Receiving a Refund, Letter, or Notice
Question 3, Topic I: Post Unemployment Compensation Exclusion Adjustment.

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

More information about reliance is available.

WASHINGTON – The Internal Revenue Service published its Financial Report on IRS.gov today. This new report provides the American people with a comprehensive view of the IRS’s financial activities as well as the accomplishments of its finance management community.

In fiscal year 2021, the IRS managed more than $4.1 trillion in tax revenue, $1.1 trillion in refunds and $658 billion in unpaid assessments, as well as the resources that support its mission. In addition, Congress and both Administrations entrusted the IRS with $2.4 billion in supplemental funding to support the nation’s recovery from the COVID-19 pandemic.

“The IRS disbursed an unprecedented $1.1 trillion to Americans in fiscal year 2021,” said Teresa Hunter, IRS Chief Financial Officer. “To implement legislative requirements resulting in the expedient roll out of Economic Impact Payments, COBRA, Premium Tax Credit changes and the advanced Child Tax Credits, we overcame significant barriers. I’m proud of the finance management community’s hard work and dedication,” she said. “We strive for excellence in reporting and will continue to ensure taxpayer dollars are managed with integrity and accuracy.”

For more information about the IRS FY 2021 Financial Report visit https://www.irs.gov/pub/irs-pdf/p5456.pdf.

Revenue Procedure 2021-45 sets forth the annual inflation-adjusted items for 2022 for various provisions of the Internal Revenue Code of 1986 (Code) as amended as of November 10, 2021.  To the extent amendments to the Code are enacted for 2022 after November 10, 2021, taxpayers should consult additional guidance to determine whether these adjustments remain applicable for 2022.

Revenue Procedure 2021-45 will be in IRB:  2021-48, dated November 29, 2021.

WASHINGTON — The Internal Revenue Service today announced the tax year 2022 annual inflation adjustments for more than 60 tax provisions, including the tax rate schedules and other tax changes. Revenue Procedure 2021-45 provides details about these annual adjustments.

Highlights of changes in Revenue Procedure 2021-45: 

The tax year 2022 adjustments described below generally apply to tax returns filed in 2023.
 
The tax items for tax year 2022 of greatest interest to most taxpayers include the following dollar amounts:

• The standard deduction for married couples filing jointly for tax year 2022 rises to $25,900 up $800 from the prior year. For single taxpayers and married individuals filing separately, the standard deduction rises to $12,950 for 2022, up $400, and for heads of households, the standard deduction will be $19,400 for tax year 2022, up $600.
• The personal exemption for tax year 2022 remains at 0, as it was for 2021, this elimination of the personal exemption was a provision in the Tax Cuts and Jobs Act. 
• Marginal Rates: For tax year 2022, the top tax rate remains 37% for individual single taxpayers with incomes greater than $539,900 ($647,850 for married couples filing jointly).

The other rates are:

35%, for incomes over $215,950  ($431,900  for married couples filing jointly);

32% for incomes over $170,050  ($340,100  for married couples filing jointly);

24% for incomes over $89,075  ($178,150  for married couples filing jointly);

22% for incomes over $41,775 ($83,550  for married couples filing jointly);

12% for incomes over $10,275  ($20,550  for married couples filing jointly).

The lowest rate is 10% for incomes of single individuals with incomes of $10,275 or less ($20,550 for married couples filing jointly).

• For 2022, as in 2021, 2020, 2019 and 2018, there is no limitation on itemized deductions, as that limitation was eliminated by the Tax Cuts and Jobs Act.
• The Alternative Minimum Tax exemption amount for tax year 2022 is $75,900 and begins to phase out at $539,900 ($118,100 for married couples filing jointly for whom the exemption begins to phase out at $1,079,800). The 2021 exemption amount was $73,600 and began to phase out at $523,600 ($114,600 for married couples filing jointly for whom the exemption began to phase out at $1,047,200).
• The tax year 2022 maximum Earned Income Tax Credit amount is $6,935 for qualifying taxpayers who have three or more qualifying children, up from $6,728 for tax year 2021. The revenue procedure contains a table providing maximum EITC amount for other categories, income thresholds and phase-outs.
• For tax year 2022, the monthly limitation for the qualified transportation fringe benefit and the monthly limitation for qualified parking increases to $280.
• For the taxable years beginning in 2022, the dollar limitation for employee salary reductions for contributions to health flexible spending arrangements increases to $2,850.  For cafeteria plans that permit the carryover of unused amounts, the maximum carryover amount is $570, an increase of $20 from taxable years beginning in 2021.
• For tax year 2022, participants who have self-only coverage in a Medical Savings Account, the plan must have an annual deductible that is not less than $2,450, up $50  from tax year 2021; but not more than $3,700, an increase of $100 from tax year 2021. For self-only coverage, the maximum out-of-pocket expense amount is $4,950, up $150  from 2021. For tax year 2022, for family coverage, the annual deductible is not less than $4,950, up from $4,800 in 2021; however, the deductible cannot be more than $7,400, up $250 from the limit for tax year 2021. For family coverage, the out-of-pocket expense limit is $9,050 for tax year 2022, an increase of $300 from tax year 2021.
• The modified adjusted gross income amount used by joint filers to determine the reduction in the Lifetime Learning Credit provided in § 25A(d)(2) is not adjusted for inflation for taxable years beginning after December 31, 2020.  The Lifetime Learning Credit is phased out for taxpayers with modified adjusted gross income in excess of $80,000 ($160,000 for joint returns).
• For tax year 2022, the foreign earned income exclusion is $112,000 up from $108,700 for tax year 2021.
• Estates of decedents who die during 2022 have a basic exclusion amount of $12,060,000, up from a total of $11,700,000 for estates of decedents who died in 2021.
• The annual exclusion for gifts increases to $16,000 for calendar year 2022, up from $15,000  for calendar year 2021.
• The maximum credit allowed for adoptions for tax year 2022 is the amount of qualified adoption expenses up to $14,890, up from $14,440 for 2021.

WASHINGTON – The Internal Revenue Service today updated frequently-asked-questions (FAQs) for the 2021 Child Tax Credit and Advance Child Tax Credit Payments to describe how taxpayers can now provide the IRS an estimate of your 2021 income using the Child Tax Credit Update Portal (CTC UP).

These FAQs update the Advance Child Tax Credit Topic A FAQs by adding a new question, question 17 and Topic F FAQs by adding new questions, questions 2 through 6.

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

More information about reliance is available.

Additional Advance Child Tax Credit information

The IRS has created a special Advance Child Tax Credit Payments in 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 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. People can check their eligibility by using the Advance Child Tax Credit Eligibility Assistant.

The webpage features a set of frequently asked questions. 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.

Rev. Proc. 2021-47 provides guidance on the income tax treatment and information reporting requirements for payments made to or on behalf of financially distressed individual homeowners by certain entities with funds allocated from the Homeowner Assistance Fund (HAF), which was established under section 3206 of the American Rescue Plan Act of 2021, Pub. L. No. 117-2, 135 Stat. 4 (March 11, 2021) (ARP), in response to the coronavirus disease (COVID-19) pandemic. 

This revenue procedure provides that a payment made by a State or State entity to, or for the benefit of, a homeowner from funds allocated from HAF is a qualified disaster relief payment within the meaning of § 139(b)(4), and such payments are not included in the homeowner’s gross income.  In addition, the revenue procedure provides an optional safe harbor method for homeowners to compute their itemized deductions for mortgage interest and real property taxes when in the same taxable year the homeowner has received, or benefited from, a HAF payment from a State or State entity that may be used to pay a portion of a homeowner’s mortgage interest and/or real property taxes and the homeowner has also paid a portion of the mortgage interest and real property taxes with funds from the homeowner’s own sources.  

This revenue procedure also provides guidance to States, and mortgage lenders and servicers regarding information reporting requirements relating to certain HAF payments